SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1 to
FORM S-6
For Registration Under the Securities Act of 1933 of Securities
of Unit Investment Trusts Registered on Form N-8B-2
A. Exact Name of Trust: FT 611
B. Name of Depositor: NIKE SECURITIES L.P.
C. Complete Address of Depositor's 1001 Warrenville Road
Principal Executive Offices: Lisle, Illinois 60532
D. Name and Complete Address of
Agents for Service: NIKE SECURITIES L.P.
Attention: James A. Bowen
Suite 300
1001 Warrenville Road
Lisle, Illinois 60532
CHAPMAN & CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title of Securities
Being Registered: An indefinite number of
Units pursuant to Rule
24f-2 promulgated under
the Investment Company Act
of 1940, as amended.
F. Approximate Date of Proposed
Sale to the Public: ____ Check if it is
proposed that this filing
will become effective on
_____ at ____ p.m.
pursuant to Rule 487.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED FEBRUARY 5, 2002
AS AMENDED MARCH 14, 2002
The Dow(sm) Dividend And Repurchase Target 5
Portfolio, 2(nd) Quarter 2002 Series
European Target 20 Portfolio, 2(nd) Quarter 2002 Series
Global Target 15 Portfolio, 2(nd) Quarter 2002 Series
Target Small-Cap Portfolio, 2(nd) Quarter 2002 Series
Target VIP Portfolio, 2(nd) Quarter 2002 Series
Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002 Series
Total Target (nd) Quarter 2002 Series
FT 611
FT 611 is a series of a unit investment trust, the FT Series. FT 611
consists of eight separate portfolios listed above (each, a "Trust," and
collectively, the "Trusts"). Each Trust invests in a portfolio of common
stocks ("Securities") selected by applying a specialized strategy. The
objective of each Trust is to provide the potential for an above-average
total return.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
FIRST TRUST (R)
1-800-621-9533
The date of this prospectus is March __, 2002
Page 1
Table of Contents
Summary of Essential Information 3
Fee Table 5
Report of Independent Auditors 7
Statements of Net Assets 8
Schedules of Investments 11
The FT Series 27
Portfolios 27
Risk Factors 32
Hypothetical Performance Information 34
Public Offering 37
Distribution of Units 39
The Sponsor's Profits 40
The Secondary Market 40
How We Purchase Units 40
Expenses and Charges 41
Tax Status 41
Retirement Plans 43
Rights of Unit Holders 44
Income and Capital Distributions 44
Redeeming Your Units 45
Investing in a New Trust 46
Removing Securities from a Trust 47
Amending or Terminating the Indenture 47
Information on the Sponsor, Trustee and Evaluator 48
Other Information 49
Page 2
Summary of Essential Information
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Sponsor: Nike Securities L.P.
Trustee: JPMorgan Chase Bank
Evaluator: First Trust Advisors L.P.
European Global
The Dow(sm) Target 20 Target 15 Target Small-Cap
DART 5 Portfolio Portfolio Portfolio Portfolio
2(nd) Quarter 2(nd) Quarter 2(nd) Quarter 2(nd) Quarter
2002 Series 2002 Series 2002 Series 2002 Series
____________ ____________ ____________ ____________
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities
per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of % of the Public
Offering Price per Unit ( % of the net amount
invested, exclusive of the deferred sales
charge and
creation and development fee) (3) $ .270 $ .270 $ .270 $ .270
Less Deferred Sales Charge per Unit $ ( ) $ ( ) $ ( ) $ ( )
Less Creation and Development Fee per Unit $ (.025) $ (.025) $ (.025) $ (.025)
Public Offering Price per Unit (4) $10.000 $10.000 $10.000 $10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.730 $ 9.730 $ 9.730 $ 9.730
Redemption Price per Unit
(based on aggregate underlying value of Securities
less the deferred sales charge) (5) $ 9.730 $ 9.730 $ 9.730 $ 9.730
Estimated Net Annual Distribution per Unit (6) $ $ $ $ N.A.
Cash CUSIP Number
Reinvestment CUSIP Number
Fee Accounts Cash CUSIP Number
Fee Accounts Reinvestment CUSIP Number
Security Code
Ticker Symbol
First Settlement Date April __, 2002
Rollover Notification Date ________, 2003
Special Redemption and Liquidation Period ________, 2003 to ________, 2003
Mandatory Termination Date (7) ________, 2003
Income Distribution Record Date Fifteenth day of June and December, commencing ________, 2002.
Income Distribution Date (6) Last day of June and December, commencing ________, 2002.
____________
<FN>
See "Notes to Summary of Essential Information" on page 4.
</FN>
Page 3
Summary of Essential Information
FT 611
At the Opening of Business on the Initial Date of Deposit-March __, 2002
Sponsor: Nike Securities L.P.
Trustee: JPMorgan Chase Bank
Evaluator: First Trust Advisors L.P.
Target VIP Target VIP Target VIP
Portfolio Aggressive Equity Conservative Equity Total Target
2(nd) Portfolio, 2(nd) Portfolio, 2(nd) Portfolio, 2(nd)
Quarter 2002 Quarter 2002 Quarter 2002 Quarter 2002
Series Series Series Series
____________ ____________ ____________ ____________
Initial Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1) 1/ 1/ 1/ 1/
Public Offering Price:
Aggregate Offering Price Evaluation of Securities
per Unit (2) $ 9.900 $ 9.900 $ 9.900 $ 9.900
Maximum Sales Charge of % of the Public
Offering Price per Unit ( % of the net amount
invested, exclusive of the deferred sales
charge and
creation and development fee) (3) $ .270 $ .270 $ .270 $ .270
Less Deferred Sales Charge per Unit $ ( ) $ ( ) $ ( ) $ ( )
Less Creation and Development Fee per Unit $ (.025) $ (.025) $ (.025) $ (.025)
Public Offering Price per Unit (4) $10.000 $10.000 $10.000 $10.000
Sponsor's Initial Repurchase Price per Unit (5) $ 9.730 $ 9.730 $ 9.730 $ 9.730
Redemption Price per Unit (based on aggregate
underlying
value of Securities less the deferred sales $ 9.730 $ 9.730 $ 9.730 $ 9.730
charge) (5)
Estimated Net Annual Distribution per Unit (6) $ N.A. $ N.A. $ N.A. $ N.A.
Cash CUSIP Number
Reinvestment CUSIP Number
Fee Accounts Cash CUSIP Number
Fee Accounts Reinvestment CUSIP Number
Security Code
Ticker Symbol
First Settlement Date April __, 2002
Rollover Notification Date ________, 2003
Special Redemption and Liquidation Period ________, 2003 to ________, 2003
Mandatory Termination Date (7) ________, 2003
Income Distribution Record Date Fifteenth day of June and December, commencing ________, 2002.
Income Distribution Date (6) Last day of June and December, commencing ________, 2002.
_____________
<FN>
NOTES TO SUMMARY OF ESSENTIAL INFORMATION
(1) As of the close of business on April __, 2002, we may adjust the
number of Units of a Trust so that the Public Offering Price per Unit
will equal approximately $10.00. If we make such an adjustment, the
fractional undivided interest per Unit will vary from the amounts
indicated above.
(2) Each listed Security is valued at its last closing sale price on the
relevant stock exchange on the business day prior to the Initial Date of
Deposit. If a Security is not listed, or if no closing sale price
exists, it is valued at its closing ask price on such date. The value of
foreign Securities trading in non-U.S. currencies is determined by
converting the value of such Securities to their U.S. dollar equivalent
based on the offering side of the currency exchange rate for the
currency in which a Security is generally denominated at the Evaluation
Time on the business day prior to the Initial Date of Deposit.
Evaluations for purposes of determining the purchase, sale or redemption
price of Units are made as of the close of trading on the New York Stock
Exchange ("NYSE") (generally 4:00 p.m. Eastern time) on each day on
which it is open (the "Evaluation Time").
(3) The maximum sales charge consists of an initial sales charge, a
deferred sales charge and the creation and development fee. See "Fee
Table" and "Public Offering."
(4) The Public Offering Price shown above reflects the value of the
Securities on the business day prior to the Initial Date of Deposit. No
investor will purchase Units at this price. The price you pay for your
Units will be based on their valuation at the Evaluation Time on the
date you purchase your Units. On the Initial Date of Deposit, the Public
Offering Price per Unit will not include any accumulated dividends on
the Securities. After this date, a pro rata share of any accumulated
dividends on the Securities will be included.
(5) During the initial offering period the Sponsor's Initial Repurchase
Price per Unit and Redemption Price per Unit will include the creation
and development fee and estimated organization costs per Unit set forth
under "Fee Table." After the initial offering period, the Sponsor's
Initial Repurchase Price per Unit and Redemption Price per Unit will not
include such creation and development fee and estimated organization
costs. See "Redeeming Your Units."
(6) The actual net annual distribution per Unit you receive will vary
from that set forth above with changes in a Trust's fees and expenses,
dividends received, currency exchange rates, foreign withholding and
with the sale of Securities. See "Fee Table" and "Expenses and Charges."
Dividend yield was not a selection criterion for the Target Small-Cap
Portfolio, the Target VIP Portfolio, the Target VIP Aggressive Equity
Portfolio, the Target VIP Conservative Equity Portfolio or the Total
Target Portfolio. At the Rollover Notification Date for Rollover Unit
holders or upon termination of a Trust for Remaining Unit holders,
amounts in the Income Account (which consist of dividends on the
Securities) will be included in amounts distributed to Unit holders. We
will distribute money from the Capital Account monthly on the last day
of each month to Unit holders of record on the fifteenth day of such
month if the amount available for distribution equals at least $1.00 per
100 Units. In any case, we will distribute any funds in the Capital
Account as part of the final liquidation distribution.
(7) See "Amending or Terminating the Indenture."
</FN>
Page 4
Fee Table
This Fee Table describes the fees and expenses that you may, directly or
indirectly, pay if you buy and hold Units of a Trust. See "Public
Offering" and "Expenses and Charges." Although the Trusts have a term of
approximately 15 months and are unit investment trusts rather than
mutual funds, this information allows you to compare fees.
The Dow (sm) European Target 20 Global Target 15
DART 5 Portfolio Portfolio Portfolio
2nd Quarter 2nd Quarter 2nd Quarter
2002 Series 2002 Series 2002 Series
__________________ ___________________ __________________
Amount Amount Amount
per Unit per Unit per Unit
________ ________ ________
Unit Holder Sales Fees
(as a percentage of public offering price)
Maximum Sales Charge
Initial sales charge 1.00%(a) $.100 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge %(b) $ %(b) $ %(b) $
Creation and development fee cap 0.25%(c) $.025 0.25%(c) $.025 0.25%(c) $.025
________ _____ ________ _____ ________ _____
Maximum Sales Charges
(including creation and development fee cap)(c) % $ % $ % $
======== ===== ======== ===== ======== =====
Organization Costs (as a percentage of public offering price)
Estimated organization costs .250%(d) $.0250 .275%(d) $.0275 .250%(d) $.0250
======== ====== ======== ====== ======== ======
Estimated Annual Trust Operating Expenses(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and
evaluation fees % $ % $ % $
Trustee's fee and other operating expenses %(f) $ %(f) $ %(f) $
________ ______ ________ ______ ________ ______
Total % $ % $ % $
======== ====== ======== ====== ======== ======
Target Target VIP Aggressive
Small-Cap Target VIP Equity Portfolio
Portfolio, 2nd Portfolio, 2nd 2nd Quarter
Quarter 2002 Series Quarter 2002 Series 2002 Series
___________________ ___________________ __________________
Amount Amount Amount
per Unit per Unit per Uni
________ ________ ________
Unit Holder Sales Fees
(as a percentage of public offering price)
Maximum Sales Charge
Initial sales charge 1.00%(a) $.100 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge %(b) $ %(b) $ %(b) $
Creation and development fee 0.25%(c) $.025 0.25%(c) $.025 0.25%(c) $.025
________ _____ ________ _____ ________ _____
Maximum Sales Charges
(including creation and development fee)(c) % $ % $ % $
======== ===== ======== ===== ======== =====
Organization Costs (as a percentage of public offering price)
Estimated organization costs .250%(d) $.0250 .250%(d) $.0250 .250%(d) $.0250
======== ====== ======== ====== ======== ======
Estimated Annual Trust Operating Expenses(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and
evaluation fees % $ % $ % $
Trustee's fee and other operating expenses %(f) $ %(f) $ %(f) $
________ ______ _______ ______ ________ ______
Total % $ % $ % $
======== ====== ======= ====== ======== ======
Page 5
Target VIP
Conservative Total Target
Equity Portfolio Portfolio
2nd Quarter 2nd Quarter
2002 Series 2002 Series
___________________ ______________
Amount Amount
per Unit per Uni
________ ________
Unit Holder Sales Fees
(as a percentage of public offering price)
Maximum Sales Charge
Initial sales charge 1.00%(a) $.100 1.00%(a) $.100
Deferred sales charge %(b) $ %(b) $
Creation and development fee 0.25%(c) $.025 0.25%(c) $.025
________ _____ ________ _____
Maximum Sales Charges
(including creation and development fee)(c) % $ % $
======== ===== ======== =====
Organization Costs (as a percentage of public offering price)
Estimated organization costs .250%(d) $.0250 .250%(d) $.0250
======== ====== ======== =====
Estimated Annual Trust Operating Expenses(e)
(as a percentage of average net assets)
Portfolio supervision, bookkeeping, administrative and
evaluation fees % $ % $
Trustee's fee and other operating expenses %(f) $ %(f) $
________ ______ ________ ______
Total % $ % $
======== ====== ======== ======
Example
This example is intended to help you compare the cost of investing in a
Trust with the cost of investing in other investment products. The
example assumes that you invest $10,000 in a Trust for the periods shown
and then sell your Units at the end of those periods. The example also
assumes a 5% return on your investment each year and that a Trust's
operating expenses stay the same. The example does not take into
consideration transaction fees which may be charged by certain
broker/dealers for processing redemption requests. Although your actual
costs may vary, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
______ _______ _______ ________
The Dow(sm) DART 5 Portfolio, 2(nd) Quarter 2002 Series $ $ $ $
European Target 20 Portfolio, 2(nd) Quarter 2002 Series
Global Target 15 Portfolio, 2(nd) Quarter 2002 Series
Target Small-Cap Portfolio, 2(nd) Quarter 2002 Series
Target VIP Portfolio, 2(nd) Quarter 2002 Series
Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002 Series
Total Target Portfolio, 2(nd) Quarter 2002 Series
The example assumes that the principal amount and distributions are
rolled annually into a New Trust, and you are subject to a reduced
transactional sales charge.
_____________
<FN>
(a) The combination of the initial and deferred sales charge comprises
what we refer to as the "transactional sales charge." The initial sales
charge is actually equal to the difference between the maximum sales
charge of % and the sum of any remaining deferred sales charge and
creation and development fee.
(b) The deferred sales charge is a fixed dollar amount equal to $ per
Unit which, as a percentage of the Public Offering Price, will vary over
time. The deferred sales charge will be deducted in three monthly
installments commencing ________, 2002.
(c) The creation and development fee compensates the Sponsor for creating
and developing the Trusts. The creation and development fee is a charge
of $.025 per Unit collected at the end of the initial offering period
which is expected to be approximately one month from the Initial Date of
Deposit. If the price you pay for your Units exceeds $10 per Unit, the
creation and development fee will be less than 0.25%; if the price you
pay for your Units is less than $10 per Unit, the creation and
development fee will exceed 0.25%.
(d) Estimated organization costs will be deducted from the assets of
each Trust at the end of the initial offering period.
(e) Each of the fees listed herein is assessed on a fixed dollar amount
per Unit basis which, as a percentage of average net assets, will vary
over time.
(f) Other operating expenses for certain Trusts include estimated per
Unit costs associated with a license fee as described in "Expenses and
Charges," but do not include brokerage costs and other portfolio
transaction fees for any of the Trusts. In certain circumstances the
Trusts may incur additional expenses not set forth above. See "Expenses
and Charges."
</FN>
Page 6
Report of Independent Auditors
The Sponsor, Nike Securities L.P., and Unit Holders
FT 611
We have audited the accompanying statements of net assets, including the
schedules of investments, of FT 611, comprising The Dow(sm) DART 5
Portfolio, 2(nd) Quarter 2002 Series; European Target 20 Portfolio,
2(nd) Quarter 2002 Series; Global Target 15 Portfolio, 2(nd) Quarter
2002 Series; Target Small-Cap Portfolio, 2(nd) Quarter 2002 Series;
Target VIP Portfolio, 2(nd) Quarter 2002 Series; Target VIP Aggressive
Equity Portfolio, 2(nd) Quarter 2002 Series; Target VIP Conservative
Equity Portfolio, 2(nd) Quarter 2002 Series; and Total Target Portfolio,
2(nd) Quarter 2002 Series (the "Trusts"), as of the opening of business
on March __, 2002 (Initial Date of Deposit). These statements of net
assets are the responsibility of the Trusts' Sponsor. Our responsibility
is to express an opinion on these statements of net assets based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the statements of net assets are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the statements of net assets. Our procedures
included confirmation of the irrevocable letter of credit held by
JPMorgan Chase Bank, the Trustee, and allocated among the Trusts for the
purchase of Securities, as shown in the statements of net assets, as of
the opening of business on March __, 2002, by correspondence with the
Trustee. An audit also includes assessing the accounting principles used
and significant estimates made by the Trusts' Sponsor, as well as
evaluating the overall presentation of the statements of net assets. We
believe that our audits of the statements of net assets provide a
reasonable basis for our opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of FT 611,
comprising The Dow(sm) DART 5 Portfolio, 2(nd) Quarter 2002 Series;
European Target 20 Portfolio, 2(nd) Quarter 2002 Series; Global Target
15 Portfolio, 2(nd) Quarter 2002 Series; Target Small-Cap Portfolio,
2(nd) Quarter 2002 Series; Target VIP Portfolio, 2(nd) Quarter 2002
Series; Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002
Series; Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002
Series; and Total Target Portfolio, 2(nd) Quarter 2002 Series, at the
opening of business on March __, 2002 (Initial Date of Deposit) in
conformity with accounting principles generally accepted in the United
States of America.
DELOITTE & TOUCHE LLP
Chicago, Illinois
March __, 2002
Page 7
Statements of Net Assets
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
The Dow(sm) European Target 20 Global Target 15 Target Small-Cap
DART 5 Portfolio Portfolio Portfolio Portfolio
2(nd) Quarter 2(nd) Quarter 2(nd) Quarter 2(nd) Quarter
2002 Series 2002 Series 2002 Series 2002 Series
_____________ _____________ _____________ _____________
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $ $ $ $
Less liability for reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( ) ( )
Less liability for creation and development
fee (5) ( ) ( ) ( ) ( )
_______ _______ _______ _______
Net assets $ $ $ $
======= ======= ======= =======
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (6) $ $ $ $
Less maximum transactional sales charge (6) ( ) ( ) ( ) ( )
Less estimated reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
_______ _______ _______ _______
Net assets $ $ $ $
======= ======= ======= =======
__________
<FN>
See "Notes to Statements of Net Assets" on page 10.
</FN>
Page 8
Statements of Net Assets
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Target VIP Target VIP Target VIP Total Target
Portfolio Aggressive Equity Conservative Equity Portfolio
2(nd) Quarter Portfolio, 2(nd) Portfolio, 2(nd) 2(nd) Quarter
2002 Series Quarter 2002 Series Quarter 2002 Series 2002 Series
_____________ _____________ _____________ _____________
NET ASSETS
Investment in Securities represented
by purchase contracts (1) (2) $ $ $ $
Less liability for reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
Less liability for deferred sales charge (4) ( ) ( ) ( ) ( )
Less liability for creation and development
fee (5) ( ) ( ) ( ) ( )
_______ _______ _______ _______
Net assets $ $ $ $
======= ======= ======= =======
Units outstanding
ANALYSIS OF NET ASSETS
Cost to investors (6) $ $ $ $
Less maximum transactional sales charge (6) ( ) ( ) ( ) ( )
Less estimated reimbursement to Sponsor
for organization costs (3) ( ) ( ) ( ) ( )
_______ _______ _______ _______
Net assets $ $ $ $
======= ======= ======= =======
__________
<FN>
See "Notes to Statements of Net Assets" on page 10.
Page 9
NOTES TO STATEMENTS OF NET ASSETS
(1) Aggregate cost of the Securities listed under "Schedule of
Investments" for each Trust is based on their aggregate underlying value.
(2) An irrevocable letter of credit for $_________ issued by JPMorgan
Chase Bank ($_________ of which will be allocated among each of The
Dow(sm) DART 5 Portfolio, 2(nd) Quarter 2002 Series; European Target 20
Portfolio, 2(nd) Quarter 2002 Series; Global Target 15 Portfolio, 2(nd)
Quarter 2002 Series; Target Small-Cap Portfolio, 2(nd) Quarter 2002
Series; and the Total Target Portfolio, 2(nd) Quarter 2002 Series; and
$________ of which will be allocated to the Target VIP Portfolio, 2(nd)
Quarter 2002 Series; the Target VIP Aggressive Equity Portfolio, 2(nd)
Quarter 2002 Series; and the Target VIP Conservative Equity Portfolio,
2(nd) Quarter 2002 Series) has been deposited with the Trustee as
collateral, covering the monies necessary for the purchase of the
Securities according to their purchase contracts.
(3) A portion of the Public Offering Price consists of an amount
sufficient to reimburse the Sponsor for all or a portion of the costs of
establishing the Trusts. These costs have been estimated at $.0250,
$.0275, $.0250, $.0250, $.0250, $.0250, $.0250 and $.0250 per Unit for
The Dow(sm) DART 5 Portfolio, 2(nd) Quarter 2002 Series; the European
Target 20 Portfolio, 2(nd) Quarter 2002 Series; Global Target 15
Portfolio, 2(nd) Quarter 2002 Series; the Target Small-Cap Portfolio,
2(nd) Quarter 2002 Series; the Target VIP Portfolio, 2(nd) Quarter 2002
Series; the Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002
Series; the Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002
Series; and Total Target Portfolio, 2(nd) Quarter 2002 Series,
respectively. A payment will be made at the end of the initial offering
period to an account maintained by the Trustee from which the obligation
of the investors to the Sponsor will be satisfied. To the extent that
actual organization costs of a Trust are greater than the estimated
amount, only the estimated organization costs added to the Public
Offering Price will be reimbursed to the Sponsor and deducted from the
assets of such Trust.
(4) Represents the amount of mandatory deferred sales charge
distributions from a Trust ($ per Unit), payable to the Sponsor in
three approximately equal monthly installments beginning on ________,
2002 and on the twentieth day of each month thereafter (or if such date
is not a business day, on the preceding business day) through ________,
2002. If Unit holders redeem Units before ________, 2002 they will have
to pay the remaining amount of the deferred sales charge applicable to
such Units when they redeem them.
(5)The creation and development fee is payable by a Trust on behalf of
Unit holders out of assets of a Trust at the end of the initial offering
period. If Units are redeemed prior to the close of the initial offering
period, the fee will not be deducted from the proceeds.
(6) The aggregate cost to investors in a Trust includes a maximum sales
charge (comprised of an initial and a deferred sales charge and the
creation and development fee) computed at the rate of % of the Public
Offering Price (equivalent to % of the net amount invested, exclusive
of the deferred sales charge and the creation and development fee),
assuming no reduction of the maximum sales charge as set forth under
"Public Offering."
</FN>
Page 10
Schedule of Investments
The Dow(sm) Dividend And Repurchase Target 5 Portfolio, 2(nd) Quarter
2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Offering Value per Securities to Dividend
Shares Name of Issuer of Securities (1) Price Share the Trust (2) Yield (3)
______ _______________________________________ ___________ ________ _____________ ______
% $ $ %
% %
% %
% %
% %
______ ________
Total Investments 100% $
===== ========
___________
<FN>
See "Notes to Schedules of Investments" on page 26.
</FN>
Page 11
Schedule of Investments
European Target 20 Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Percentage
Number of Aggregate Market Cost of Current
of Ticker Symbol and Offering Value Securities to Dividend
Shares Name of Issuer of Securities (1) Price per Share the Trust (2) Yield (3)
______ _______________________________________ _________ _________ _________ _________
% $ $ %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
% %
_______ ________
Total Investments 100% $
======= ========
___________
<FN>
See "Notes to Schedules of Investments" on page 26.
</FN>
Page 12
Schedule of Investments
Global Target 15 Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Percentage Cost of
Number of Aggregate Market Securities Current
of Offering Value per to the Dividend
Shares Name of Issuer of Securities (1) Price Share Trust (2) Yield (3)
______ _______________________________________ ___________ ________ ___________ _________
DJIA COMPANIES:
_______________
% $ $ %
% %
% %
% %
% %
FT INDEX COMPANIES:
___________________
% %
% %
% %
% %
% %
HANG SENG INDEX COMPANIES:
_________________________
% %
% %
% %
% %
% %
_____ ________
Total Investments 100.00% $
===== ========
_____________
<FN>
See "Notes to Schedules of Investments" on page 26.
</FN>
Page 13
Schedule of Investments
Target Small-Cap Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and of Aggregate Value per Securities to
Shares Name of Issuer of Securities (1) Offering Price Share the Trust (2)
______ _______________________________________ ____________ ________ ____________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
_______ __________
Total Investments 100.00% $
======= ==========
___________
<FN>
See "Notes to Schedules of Investments" on page 26.
</FN>
Page 14
Schedule of Investments
Target VIP Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
Dow(sm) DART 5 Strategy Stocks (xx.xx%):
____________________________________
% $ $
%
%
%
%
European Target 20 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
The Nasdaq(R) Target 15 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Page 15
Schedule of Investments (cont'd.)
Target VIP Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
The S&P Target 24 Strategy Stocks (xx.xx%):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Target Small-Cap Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Page 16
Schedule of Investments (cont'd.)
Target VIP Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
Target Small-Cap Strategy Stocks (cont'd.):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Value Line(R) Target 25 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
_______ _______
Total Investments 100.00% $
======= =======
___________
<FN>
See "Notes to Schedules of Investments" on page 26.
</FN>
Page 17
Schedule of Investments
Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ ___________
Dow(sm) DART 10 Strategy Stocks (xx.xx%):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
European Target 20 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
The Nasdaq(R) Target 15 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Page 18
Schedule of Investments (cont'd.)
Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
The S&P Target 24 Strategy Stocks (xx.xx%):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Target Small-Cap Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Page 19
Schedule of Investments (cont'd.)
Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
Target Small-Cap Strategy Stocks (cont'd.):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Value Line(R) Target 25 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
_______ _______
Total Investments 100.00% $
======= =========
___________
<FN>
See "Notes to Schedules of Investments" on page 26.
</FN>
Page 20
Schedule of Investments
Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ ___________
Dow(sm) DART 10 Strategy Stocks (xx.xx%):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
European Target 20 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
The S&P Target 24 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
Page 21
Schedule of Investments (cont'd.)
Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
The S&P Target 24 Strategy Stocks (cont'd.)
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
Target Small-Cap Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
Page 22
Schedule of Investments (cont'd.)
Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
Target Small-Cap Strategy Stocks (cont'd.):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
Value Line(R) Target 25 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
_______ _______
Total Investments 100.00% $
======= =========
___________
<FN>
See "Notes to Schedules of Investments" on page 26.
</FN>
Page 23
Schedule of Investments
Total Target Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
The Dow(sm) DART 5 Strategy Stocks (xx.xx%):
____________________________________
% $ $
%
%
%
%
The Nasdaq(R) Target 15 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
The S&P Target 24 Strategy Stocks (xx.xx%):
____________________________________
%
%
%
%
%
%
Page 24
Schedule of Investments (cont'd.)
Total Target Portfolio, 2(nd) Quarter 2002 Series
FT 611
At the Opening of Business on the
Initial Date of Deposit-March __, 2002
Number Percentage Market Cost of
of Ticker Symbol and Name of of Aggregate Value Securities to
Shares Issuer of Securities (1) Offering Price per Share the Trust (2)
______ _______________________________ ____________ _________ _____________
The S&P Target 24 Strategy Stocks (cont'd.):
____________________________________
% $ $
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
_______ _______
Total Investments 100.00% $
======= =========
___________
<FN>
See "Notes to Schedules of Investments" on page 26.
Page 25
NOTES TO SCHEDULES OF INVESTMENTS
(1) All Securities are represented by regular way contracts to purchase
such Securities which are backed by an irrevocable letter of credit
deposited with the Trustee. The Sponsor entered into purchase contracts
for the Securities on March __, 2002. Each Trust has a Mandatory
Termination Date of ________, 2003.
(2) The cost of the Securities to a Trust represents the aggregate
underlying value with respect to the Securities acquired-generally
determined by the closing sale prices of the Securities on the
applicable exchange (where applicable, converted into U.S. dollars at
the offer side of the exchange rate at the Evaluation Time) at the
Evaluation Time on March __, 2002, the business day prior to the Initial
Date of Deposit. The valuation of the Securities has been determined by
the Evaluator, an affiliate of the Sponsor. The cost of the Securities
to the Sponsor and the Sponsor's profit or loss (which is the difference
between the cost of the Securities to the Sponsor and the cost of the
Securities to a Trust) are set forth below:
Cost of
Securities Profit
to Sponsor (Loss)
___________ ______
The Dow(sm) DART 5 Portfolio, 2(nd) Quarter 2002 Series $ $
European Target 20 Portfolio, 2(nd) Quarter 2002 Series
Global Target 15 Portfolio, 2(nd) Quarter 2002 Series
Target Small-Cap Portfolio, 2(nd) Quarter 2002 Series
Target VIP Portfolio, 2(nd) Quarter 2002 Series
Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002 Series
Total Target Portfolio, 2(nd) Quarter 2002 Series
(3) Current Dividend Yield for each Security was calculated by dividing
the most recent annualized ordinary dividend declared on a Security by
that Security's closing sale price at the Evaluation Time on the
business day prior to the Initial Date of Deposit, without consideration
of foreign withholding or changes in currency exchange rates, if
applicable.
</FN>
Page 26
The FT Series
The FT Series Defined.
We, Nike Securities L.P. (the "Sponsor"), have created hundreds of
similar yet separate series of a unit investment trust which we have
named the FT Series. The series to which this prospectus relates, FT
611, consists of eight separate portfolios set forth below:
- - The Dow(sm) DART 5 Portfolio
- - European Target 20 Portfolio
- - Global Target 15 Portfolio
- - Target Small-Cap Portfolio
- - Target VIP Portfolio
- - Target VIP Aggressive Equity Portfolio
- - Target VIP Conservative Equity Portfolio
- - Total Target Portfolio
Each Trust was created under the laws of the State of New York by a
Trust Agreement (the "Indenture") dated the Initial Date of Deposit.
This agreement, entered into among Nike Securities L.P., as Sponsor,
JPMorgan Chase Bank as Trustee and First Trust Advisors L.P. as
Portfolio Supervisor and Evaluator, governs the operation of the Trusts.
YOU MAY GET MORE SPECIFIC DETAILS CONCERNING THE NATURE, STRUCTURE AND
RISKS OF THIS PRODUCT IN AN "INFORMATION SUPPLEMENT" BY CALLING THE
TRUSTEE AT 1-800-682-7520.
How We Created the Trusts.
On the Initial Date of Deposit, we deposited portfolios of common stocks
with the Trustee and in turn, the Trustee delivered documents to us
representing our ownership of the Trusts in the form of units ("Units").
After the Initial Date of Deposit, we may deposit additional Securities
in a Trust, or cash (including a letter of credit) with instructions to
buy more Securities, to create new Units for sale. If we create
additional Units, we will attempt, to the extent practicable, to
maintain the percentage relationship established among the Securities on
the Initial Date of Deposit (as set forth in "Schedule of Investments"
for each Trust), and not the percentage relationship existing on the day
we are creating new Units, since the two may differ. This difference may
be due to the sale, redemption or liquidation of any of the Securities.
Since the prices of the Securities will fluctuate daily, the ratio of
Securities in a Trust, on a market value basis, will also change daily.
The portion of Securities represented by each Unit will not change as a
result of the deposit of additional Securities or cash in a Trust. If we
deposit cash, you and new investors may experience a dilution of your
investment. This is because prices of Securities will fluctuate between
the time of the cash deposit and the purchase of the Securities, and
because the Trusts pay the associated brokerage fees. To reduce this
dilution, the Trusts will try to buy the Securities as close to the
Evaluation Time and as close to the evaluation price as possible. In
addition, because the Trusts pay the brokerage fees associated with the
creation of new Units and with the sale of Securities to meet redemption
and exchange requests, frequent redemption and exchange activity will
likely result in higher brokerage expenses.
An affiliate of the Trustee may receive these brokerage fees or the
Trustee may retain and pay us (or our affiliate) to act as agent for a
Trust to buy Securities. If we or an affiliate of ours act as agent to a
Trust we will be subject to the restrictions under the Investment
Company Act of 1940, as amended.
We cannot guarantee that a Trust will keep its present size and
composition for any length of time. Securities may periodically be sold
under certain circumstances, and the proceeds from these sales will be
used to meet Trust obligations or distributed to Unit holders, but will
not be reinvested. However, Securities will not be sold to take
advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation, or if they no longer meet the criteria by
which they were selected. You will not be able to dispose of or vote any
of the Securities in a Trust. As the holder of the Securities, the
Trustee will vote all of the Securities and will do so based on our
instructions.
Neither we nor the Trustee will be liable for a failure in any of the
Securities. However, if a contract for the purchase of any of the
Securities initially deposited in a Trust fails, unless we can purchase
substitute Securities ("Replacement Securities") we will refund to you
that portion of the purchase price and transactional sales charge
resulting from the failed contract on the next Income Distribution Date.
Any Replacement Security a Trust acquires will be identical to those
from the failed contract.
Portfolios
Objectives.
When you invest in a Trust you are purchasing a quality portfolio of
attractive common stocks in one convenient purchase. The objective of
each Trust is to provide the potential for an above-average total
return. To achieve this objective, each Trust will invest in the common
Page 27
stocks of companies which are selected by applying a unique specialized
strategy. While the Trusts seek to provide the potential for above-
average return, each follows a different investment strategy. We cannot
guarantee that a Trust will achieve its objective or that a Trust will
make money once expenses are deducted.
The Dow(sm) Dividend and Repurchase Target Portfolio Strategies.
Both the Dow(sm) Dividend and Repurchase Target ("DART") 5 Portfolio
Strategy and the Dow(sm) DART 10 Strategy select a portfolio of Dow
Jones Industrial Average ("DJIA") stocks with high dividend yields
and/or high buyback ratios and, for the Dow(sm) DART 5 Portfolio
Strategy, high return on assets, as a means to achieving each Strategy's
investment objective. By analyzing dividend yields, each Strategy seeks
to uncover stocks that may be out of favor or undervalued. More
recently, many companies have turned to stock reduction programs as a
tax efficient way to bolster their stock prices and reward shareholders.
Companies which have reduced their shares through a share buyback
program may provide a strong cash flow position and, in turn, high
quality earnings. Buyback ratio is the ratio of a company's shares of
common stock outstanding 12 months prior to the date of this prospectus
divided by a company's shares outstanding as of the business day prior
to the date of this prospectus, minus "1."
The Dow(sm) Dividend and Repurchase Target 5 Portfolio Strategy.
The Dow(sm) DART 5 Portfolio stocks are determined as follows:
Step 1: We rank all 30 stocks contained in the DJIA by the sum of their
dividend yield and buyback ratio as of the business day prior to the
date of this prospectus.
Step 2: We then select the 10 stocks with the highest combined dividend
yields and buyback ratios.
Step 3: From the 10 stocks selected in Step 2, we select the five stocks
with the greatest increase in the percentage change in return on assets
in the most recent year as compared to the previous year for The Dow(sm)
DART 5 Portfolio.
Based on the composition of the portfolio on the Initial Date of
Deposit, The Dow(sm) DART 5 Portfolio is considered a ________ Trust.
The Dow(sm) Dividend and Repurchase Target 10 Strategy.
The Dow(sm) DART 10 Strategy stocks are determined as follows:
Step 1: We rank all 30 stocks contained in the DJIA by the sum of their
dividend yield and buyback ratio as of the business day prior to the
date of this prospectus.
Step 2: We then select the 10 stocks with the highest combined dividend
yields and buyback ratios for The Dow(sm) DART 10 Portfolio.
European Target 20 Portfolio Strategy.
The European Target 20 Portfolio is determined as follows:
Step 1:We rank the 120 largest companies based on market capitalization
which are headquartered in Austria, Belgium, Denmark, Finland, Germany,
Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the United Kingdom by dividend yield as of five
business days prior to the date of this prospectus.
Step 2:We select the 20 highest dividend-yielding stocks for the
European Target 20 Portfolio.
During the initial offering period, the European Target 20 Portfolio
will not invest more than 5% of its portfolio in shares of any one
securities-related issuer.
Global Target 15 Portfolio Strategy.
The Global Target 15 Portfolio stocks are determined as follows:
Step 1: We rank all stocks contained in the DJIA, the Financial Times
Industrial Ordinary Share Index ("FT Index") and the Hang Seng Index by
dividend yield as of the business day prior to the date of this
prospectus in the case of DJIA stocks or three business days prior to
the date of this prospectus in the case of FT Index and Hang Seng Index
stocks.
Step 2: We select the 10 highest dividend-yielding stocks in each
respective index.
Step 3: We select the five stocks with the lowest per share stock price
of the 10 highest-dividend yielding stocks in each respective index as
of their respective selection date for the Global Target 15 Portfolio.
Companies which, on or before their respective selection date, are
subject to any of the limited circumstances which warrant removal of a
Security from a Trust as described under "Removing Securities from a
Trust" have been excluded from the Global Target 15 Portfolio Strategy.
Target Small-Cap Portfolio Strategy.
The Target Small-Cap Portfolio invests in stocks with small market
capitalizations which have recently exhibited certain positive financial
attributes. The Target Small-Cap Portfolio is determined as follows:
Step 1:We select the stocks of all U.S. corporations which trade on the
Page 28
NYSE, the American Stock Exchange ("AMEX") or The Nasdaq Stock Market
("Nasdaq") (excluding limited partnerships, American Depositary Receipts
and mineral and oil royalty trusts) as of two business days prior to the
date of this prospectus.
Step 2:We then select companies which have a market capitalization of
between $150 million and $1 billion and whose stock has an average daily
dollar trading volume of at least $500,000.
Step 3:We next select stocks with positive three-year sales growth.
Step 4:From there we select those stocks whose most recent annual
earnings are positive.
Step 5:We eliminate any stock whose price has appreciated by more than
75% in the last 12 months.
Step 6:We select the 40 stocks with the greatest price appreciation in
the last 12 months on a relative market capitalization basis (highest to
lowest) for the Target Small-Cap Portfolio.
For purposes of applying the Target Small-Cap Strategy, market
capitalization and average trading volume are based on 1996 dollars
which are periodically adjusted for inflation. All steps apply monthly
and rolling quarterly data instead of annual figures where possible.
Based on the composition of the portfolio on the Initial Date of
Deposit, the Target Small-Cap Portfolio is considered a ________ Trust.
Target VIP Portfolio Strategy.
The Target VIP Portfolio Strategy invests in the common stocks of
companies which are selected by applying six uniquely specialized
strategies: The Dow(sm) DART 5 Strategy, the European Target 20
Strategy, The Nasdaq(R) Target 15 Strategy, The S&P Target 24 Strategy
and the Value Line(R) Target 25 Strategy. While each of these strategies
also seeks to provide an above-average total return, each follows a
different investment strategy. The Target VIP Portfolio Strategy seeks
to outperform the Standard & Poor's 500 Composite Stock Price Index
("S&P 500 Index"). The Target VIP Portfolio Strategy provides investors
with exposure to both growth and value stocks, as well as several
different sectors of the worldwide economy. We believe this approach
offers investors a better opportunity for investment success regardless
of which investment styles prevail in the market. The Securities which
comprise each of the six strategies which make up the Target VIP
Portfolio Strategy were chosesn by applying the same selection criteria
applicable to the individual strategies. The composition of the Target
VIP Portfolio Strategy on the Initial Date of Deposit is as follows:
- - Approximately 1/6 common stocks which comprise The Dow(sm) Dividend
and Repurchase Target ("DART") 5 Strategy;
- - Approximately 1/6 common stocks which comprise the European Target 20
Strategy;
- - Approximately 1/6 common stocks which comprise The Nasdaq(R) Target 15
Strategy;
- - Approximately 1/6 common stocks which comprise The S&P Target 24
Strategy;
- - Approximately 1/6 common stocks which comprise the Target Small-Cap
Strategy; and
- - Approximately 1/6 common stocks which comprise the Value Line(R)
Target 25 Strategy.
The Nasdaq(R) Target 15 Strategy.
The Nasdaq(R) Target 15 Strategy selects a portfolio of the 15 Nasdaq-
100 Index(R) stocks with the best overall ranking on both 12- and 6-
month price appreciation, return on assets and price to cash flow as a
means to achieving its investment objective. The Nasdaq(R) Target 15
Portfolio stocks are determined as follows:
Step 1: We select stocks which are components of the Nasdaq-100 Index(R)
as of two business days prior to the date of this prospectus and
numerically rank them by 12-month price appreciation (best [1] to worst
[100]).
Step 2: We then numerically rank the stocks by six-month price
appreciation.
Step 3: The stocks are then numerically ranked by return on assets ratio.
Step 4: We then numerically rank the stocks by the ratio of cash flow
per share to stock price.
Step 5: We add up the numerical ranks achieved by each company in the
above steps and select the 15 stocks with the lowest sums for The
Nasdaq(R) Target 15 Portfolio.
The stocks which comprise The Nasdaq(R) Target 15 Strategy are weighted
by market capitalization subject to the restriction that only whole
shares are purchased and that no stock will comprise less than 1% or 25%
or more of the portfolio on the date of this prospectus. The Securities
will be adjusted on a proportionate basis to accommodate this constraint.
The S&P Target 24 Strategy.
The S&P Target 24 Strategy selects a portfolio of 24 common stocks from
the S&P 500 Index which are based on the following steps:
Step 1:All of the economic sectors in the S&P 500 Index are ranked by
market capitalization as of two business days prior to the date of this
prospectus and the eight largest sectors are selected.
Step 2:The stocks in each of those eight sectors are then ranked among
Page 29
their peers based on three distinct factors:
Factor 1: Trailing four quarters' return on assets, which is net
income divided by average assets. Those stocks with high return on
assets achieve better rankings.
Factor 2: Buyback yield, which measures the percentage decrease in
common stock outstanding versus one year earlier. Those stocks with
greater percentage decreases receive better rankings.
Factor 3: Bullish interest indicator, which compares the number of
shares traded in months in which the stock price rose to the number of
shares traded in months in which the stock price declined. Those stocks
with a high bullish interest indicator achieve better rankings.
Step 3:The three stocks from each of the eight sectors with the highest
combined ranking on these three factors are selected for The S&P Target
24 Strategy. In the event of a tie within a sector, the stock with the
higher market capitalization is selected.
Each stock receives a weighting equivalent to its relative market value
among the three stocks from the individual sector. The combined weight
of the three stocks for a sector is equal to the sector's equivalent
weighting among the eight sectors being selected from.
Value Line(R) Target 25 Strategy.
The Value Line(R) Target 25 Strategy invests in 25 of the 100 stocks
that Value Line(R) gives a #1 ranking for Timeliness(TM) which have
recently exhibited certain positive financial attributes. Value Line(R)
ranks 1,700 stocks which represent approximately 94% of the trading
volume on all U.S. stock exchanges. Of these 1,700 stocks, only 100 are
given their #1 ranking for Timeliness(TM), which measures Value Line's
view of their probable price performance during the next six to 12
months relative to the others. Value Line(R) bases their rankings on a
long-term trend of earnings, prices, recent earnings, price momentum,
and earnings surprise. The Value Line Target 25 Strategy is determined
as follows:
Step 1:We start with the 100 stocks which Value Line(R) at the initial
date of deposit gives their #1 ranking for Timeliness(TM), remove the
stocks of companies considered to be securities related issuers and the
stocks of companies whose shares are not listed on a U.S. securities
exchange, and apply the following screens as of two business days prior
to the date of this prospectus.
Step 2:We screen for consistent growth by ranking these remaining stocks
based on 12-month and 6-month price appreciation (best [1] to worst
[100]).
Step 3:We then screen for profitability by ranking the stocks by their
return on assets.
Step 4:Finally, we screen for value by ranking the stocks based on their
price to cash flow.
Step 5:We add up the numerical ranks achieved by each company in the
above steps and select the 25 stocks with the lowest sums for the Value
Line(R) Target 25 Portfolio.
The stocks which comprise the Value Line(R) Target 25 Strategy are
weighted by market capitalization subject to the restriction that no
stock will comprise less than 1% or 25% or more of the portfolio on the
date of this prospectus. The Securities will be adjusted on a
proportionate basis to accommodate this constraint.
Based on the composition of the portfolio on the Initial Date of
Deposit, the Target VIP Portfolio is considered a ________ Trust.
Target VIP Aggressive Equity Portfolio Strategy.
The composition of the Target VIP Aggressive Portfolio Strategy on the
Initial Date of Deposit is as follows:
- - Approximately 15% common stocks which comprise The Dow(sm) DART 10
Strategy;
- - Approximately 10% common stocks which comprise the European Target 20
Strategy;
- - Approximately 15% common stocks which comprise The Nasdaq(R) Target 15
Strategy;
- - Approximately 20% common stocks which comprise The S&P Target 24
Strategy;
- - Approximately 15% common stocks which comprise the Target Small-Cap
Strategy; and
- - Approximately 25% common stocks which comprise the Value Line(R)
Target 25 Strategy.
Based on the composition of the portfolio on the Initial Date of
Deposit, the Target VIP Aggressive Equity Portfolio is considered a
________ Trust.
Target VIP Conservative Equity Portfolio Strategy.
The composition of the Target VIP Conservative Portfolio Strategy on the
Initial Date of Deposit is as follows:
- - Approximately 30% common stocks which comprise The Dow(sm) DART 10
Strategy;
- - Approximately 20% common stocks which comprise the European Target 20
Strategy;
- - Approximately 30% common stocks which comprise The S&P Target 24
Strategy;
- - Approximately 10% common stocks which comprise the Target Small-Cap
Strategy; and
Page 30
- - Approximately 10% common stocks which comprise the Value Line(R)
Target 25 Strategy.
Based on the composition of the portfolio on the Initial Date of
Deposit, the Target VIP Conservative Equity Portfolio is considered a
________ Trust.
Total Target Portfolio Strategy.
The objective of the Total Target Portfolio is to provide an above-
average total return through an investment in the common stocks of
companies which are selected by applying three of the strategies
described previously, the Dow(sm) DART 5 Strategy, The S&P Target 24
Strategy and The Nasdaq(R) Target 15 Strategy. While each of these
strategies also seeks to provide an above-average total return, each
follows a different investment strategy. The Trust seeks to outperform
the combined return of the DJIA, the S&P 500 Index and the Nasdaq-100
Index(R). The Trust's objective is to offer enhanced performance over a
pure value strategy while reducing the potential risk of a pure growth
strategy. We believe that this may provide investors with a better
opportunity to succeed regardless of which investment style prevails
moving forward. With the Total Target Strategy investors have the
ability to capture the broader market, a convenient blend of old and new
economy stocks. The Securities which comprise each of the three
strategies which make up the Total Target Portfolio were chosen by
applying the same selection criteria applicable to the individual
strategies. The composition of the Total Target Portfolio on the date of
this prospectus is as follows:
- - Approximately 1/3 common stocks which comprise The Dow(sm) DART 5
Strategy;
- - Approximately 1/3 common stocks which comprise The S&P Target 24
Strategy; and
- - Approximately 1/3 common stocks which comprise The Nasdaq(R) Target 15
Strategy.
Based on the composition of the portfolio on the Initial Date of
Deposit, the Total Target Portfolio is considered a ________ Trust.
Please note that we applied the strategies which make up the portfolio
for each Trust at a particular time. If we create additional Units of a
Trust after the Initial Date of Deposit we will deposit the Securities
originally selected by applying the strategy at such time. This is true
even if a later application of a strategy would have resulted in the
selection of different securities. In addition, companies which, based
on publicly available information as of two business days prior to the
date of this prospectus, are the subject of an announced business
combination which we expect will happen within six months of the date of
this prospectus have been excluded from the universe of securities from
which each Trust's Securities are selected.
The style and capitalization characteristics used to describe the Trusts
are designed to help you better understand how a Trust fits into your
overall investment plan. These characteristics are determined by the
Sponsor as of the Initial Date of Deposit and, due to changes in the
value of the Securities, may vary thereafter. In addition, from time to
time, analysts and research professionals may apply different criteria
to determine a Security's style and capitalization characteristics,
which may result in designations which differ from those arrived at by
the Sponsor. In general, growth portfolios include stocks with high
relative price-to-book ratios while value portfolios include stocks with
low relative price-to-book ratios. At least 65% of the stocks in a Trust
on the Initial Date of Deposit must fall into either the growth or value
category to receive the designation. Trusts that do not meet this
criteria are designated as blend Trusts. Both the weighted average
market capitalization of a Trust and at least half of the Securities in
the Trust must fall into the following ranges to determine its market
capitalization designation: Small-Cap-less than $1.5 billion; Mid-Cap-
$1.5 billion to $8 billion; Large-Cap-over $8 billion. A Trust, however,
may contain individual stocks that do not fall into its stated style or
market capitalization designation.
"Dow Jones Industrial Average(sm) ," "Dow(sm)" and "DJIA(sm)" are
service marks of Dow Jones & Company, Inc. ("Dow Jones") and have been
licensed for use for certain purposes by First Trust Advisors L.P., an
affiliate of ours. Dow Jones does not endorse, sell or promote any of
the Trusts, in particular The Dow(sm) DART 5 Portfolio, The Dow(sm) DART
10 Portfolio the Target VIP Portfolio and the Total Target Portfolio.
Dow Jones makes no representation regarding the advisability of
investing in such products.
"S&P," "S&P 500," and "Standard & Poor's" are trademarks of The McGraw-
Hill Companies, Inc. and have been licensed for use by us. Neither The
S&P Target 24 Portfolio, the Target VIP Portfolio nor the Total Target
Portfolio is sponsored, endorsed, sold or promoted by Standard & Poor's
and Standard & Poor's makes no representation regarding the advisability
of investing in such Strategy. Please see the Information Supplement
which sets forth certain additional disclaimers and limitations of
liabilities on behalf of Standard & Poor's.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are registered trademarks of Value Line
Securities, Inc. or Value Line Publishing, Inc. that have been licensed
Page 31
to Nike Securities L.P. Neither the Target VIP Portfolio nor the Value
Line(R) Target 25 Portfolio is sponsored, recommended, sold or promoted
by Value Line Publishing, Inc. Value Line, Inc. or Value Line
Securities, Inc. ("Value Line"). Value Line makes no representation
regarding the advisability of investing in the Trusts.
The publishers of the DJIA, FT Index, Hang Seng Index, MSCI Europe
Index, The Nasdaq Stock Market, Inc., Standard & Poor's, Value Line and
the Ibbotson Small-Cap Index are not affiliated with us and have not
participated in creating the Trusts or selecting the Securities for the
Trusts. None of the index publishers have approved of any of the
information in this prospectus.
Risk Factors
Price Volatility. The Trusts invest in common stocks. The value of a
Trust's Units will fluctuate with changes in the value of these common
stocks. Common stock prices fluctuate for several reasons including
changes in investors' perceptions of the financial condition of an
issuer or the general condition of the relevant stock market, or when
political or economic events affecting the issuers occur. In addition,
common stock prices may be particularly sensitive to rising interest
rates, as the cost of capital rises and borrowing costs increase.
Because the Trusts are not managed, the Trustee will not sell stocks in
response to or in anticipation of market fluctuations, as is common in
managed investments. As with any investment, we cannot guarantee that
the performance of any Trust will be positive over any period of time,
especially the relatively short 15-month life of the Trusts, or that you
won't lose money. Units of the Trusts are not deposits of any bank and
are not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Trusts which use dividend yield as a selection criterion employ a
contrarian strategy in which the Securities selected share qualities
that have caused them to have lower share prices or higher dividend
yields than other common stocks in their peer group. There is no
assurance that negative factors affecting the share price or dividend
yield of these Securities will be overcome over the life of such Trusts
or that these Securities will increase in value.
All of the Securities in the Target Small-Cap Portfolio and certain of
the Securities in the Target VIP Portfolio are issued by companies with
market capitalizations of less than $1.5 billion. The share prices of
these small-cap companies are often more volatile than those of larger
companies as a result of several factors common to many such issuers,
including limited trading volumes, products or financial resources,
management inexperience and less publicly available information.
Dividends. There is no guarantee that the issuers of the Securities will
declare dividends in the future or that if declared they will either
remain at current levels or increase over time.
Strategy. Please note that we applied the strategies which make up the
portfolio for each Trust at a particular time. If we create additional
Units of a Trust after the Initial Date of Deposit we will deposit the
Securities originally selected by applying the strategy at such time.
This is true even if a later application of a strategy would have
resulted in the selection of different securities. There is no guarantee
the strategy or the investment objective of a Trust will be achieved.
The actual performance of the Trusts will be different than the
hypothetical returns of each Trust's comparative index. Because the
Trusts are unmanaged and follow a strategy, the Trustee will not buy or
sell Securities in the event a strategy is not achieving the desired
results.
Financial Services Industry. Because more than 25% of the European
Target 20 Portfolio is invested in financial services companies, this
Trust is considered to be concentrated in the financial services
industry, which includes banks and thrifts, financial services and
insurance companies, and investment firms. A portfolio concentrated in a
single industry may present more risks than a portfolio broadly
diversified over several industries. Banks, thrifts and their holding
companies are especially subject to the adverse effects of economic
recession; volatile interest rates; portfolio concentrations in
geographic markets and in commercial and residential real estate loans;
and competition from new entrants in their fields of business. Although
recently-enacted legislation repealed most of the barriers which
separated the banking, insurance and securities industries, these
industries are still extensively regulated at both the federal and state
level and may be adversely affected by increased regulations.
Banks and thrifts face increased competition from nontraditional lending
sources as regulatory changes, such as the recently enacted financial-
services overhaul legislation, permit new entrants to offer various
financial products. Technological advances such as the Internet allow
these nontraditional lending sources to cut overhead and permit the more
efficient use of customer data.
Brokerage firms, broker/dealers, investment banks, finance companies and
mutual fund companies are also financial services providers. These
Page 32
companies compete with banks and thrifts to provide traditional
financial service products, in addition to their traditional services,
such as brokerage and investment advice. In addition, all financial
service companies face shrinking profit margins due to new competitors,
the cost of new technology and the pressure to compete globally.
Companies involved in the insurance industry are engaged in
underwriting, selling, distributing or placing of property and casualty,
life or health insurance. Insurance company profits are affected by many
factors, including interest rate movements, the imposition of premium
rate caps, competition and pressure to compete globally. Property and
casualty insurance profits may also be affected by weather catastrophes
and other disasters. Life and health insurance profits may be affected
by mortality rates. Already extensively regulated, insurance companies'
profits may also be adversely affected by increased government
regulations or tax law changes.
Legislation/Litigation. From time to time, various legislative
initiatives are proposed in the United States and abroad which may have
a negative impact on certain of the companies represented in the Trusts.
In addition, litigation regarding any of the issuers of the Securities,
such as that concerning Philip Morris Companies Inc., or any of the
industries represented by these issuers, may negatively impact the share
prices of these Securities. We cannot predict what impact any pending or
threatened litigation will have on the share prices of the Securities.
Foreign Stocks. All of the Securities in the European Target 20
Portfolio and certain of the Securities in the Global Target 15
Portfolio and the Target VIP Portfolio are issued by foreign companies,
which makes these Trusts subject to more risks than if they invested
solely in domestic common stocks. Risks of foreign common stocks include
higher brokerage costs; different accounting standards; expropriation,
nationalization or other adverse political or economic developments;
currency devaluations, blockages or transfer restrictions; restrictions
on foreign investments and exchange of securities; inadequate financial
information; lack of liquidity of certain foreign markets; and less
government supervision and regulation of exchanges, brokers, and issuers
in foreign countries.
The purchase and sale of the foreign Securities will generally occur
only in foreign securities markets. Although we do not believe that the
Trusts will have problems buying and selling these Securities, certain
of the factors stated above may make it impossible to buy or sell them
in a timely manner. Custody of certain of the Securities in the European
Target 20 Portfolio, Global Target 15 Portfolio and Target VIP Portfolio
is maintained by Clearstream Banking, a global custody and clearing
institution which has entered into a sub-custodian relationship with the
Trustee.
United Kingdom. The European Target 20 Portfolio and Global Target 15
Portfolio are each considered to be concentrated in common stocks of
U.K. issuers. The United Kingdom is one of 15 members of the European
Union ("EU") which was formed by the Maastricht Treaty on European
Union. It is expected that the Treaty will have the effect of
eliminating most remaining trade barriers between the member nations and
make Europe one of the largest common markets in the world. However, the
uncertain implementation of the Treaty provisions and recent rapid
political and social change throughout Europe make the extent and nature
of future economic development in the United Kingdom and Europe and
their effect on Securities issued by U.K. issuers impossible to predict.
Unlike a majority of EU members, the United Kingdom did not convert its
currency to the common European currency, the euro, on January 1, 1999.
All companies with significant markets or operations in Europe face
strategic challenges as these entities adapt to a single currency. The
euro conversion may materially impact revenues, expenses or income;
increase competition; affect issuers' currency exchange rate risk and
derivatives exposure; cause issuers to increase spending on information
technology updates; and result in potentially adverse tax consequences.
We cannot predict when or if the United Kingdom will convert to the euro
or what impact the implementation of the euro throughout a majority of
EU countries will have on U.K. or European issuers.
Hong Kong. The Global Target 15 Portfolio is also considered to be
concentrated in common stocks of Hong Kong issuers. Hong Kong issuers
are subject to risks related to Hong Kong's political and economic
environment, the volatility of the Hong Kong stock market, and the
concentration of real estate companies in the Hang Seng Index. Hong Kong
reverted to Chinese control on July 1, 1997 and any increase in
uncertainty as to the future economic and political status of Hong Kong,
or a deterioration of the relationship between China and the United
States, could have negative implications on stocks listed on the Hong
Kong stock market. Securities prices on the Hong Kong Stock Exchange,
and specifically the Hang Seng Index, can be highly volatile and are
sensitive to developments in Hong Kong and China, as well as other world
markets.
Exchange Rates. Because securities of foreign issuers generally pay
dividends and trade in foreign currencies, the U.S. dollar value of
these Securities (and therefore Units of the Trusts containing
Page 33
securities of foreign issuers) will vary with fluctuations in foreign
exchange rates. Most foreign currencies have fluctuated widely in value
against the U.S. dollar for various economic and political reasons. The
conversion by 11 of the 15 EU members of their national currencies to
the euro could negatively impact the market rate of exchange between
such currencies (or the euro) and the U.S. dollar.
To determine the value of foreign Securities or their dividends, the
Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, these markets can be quite volatile, depending on the activity
of the large international commercial banks, various central banks,
large multi-national corporations, speculators and other buyers and
sellers of foreign currencies. Since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated
by the Evaluator may not reflect the amount the Trusts would receive, in
U.S. dollars, had the Trustee sold any particular currency in the market.
Hypothetical Performance Information
The following table compares hypothetical performance information for
the strategies employed by each Trust and the actual performances of the
DJIA, Nasdaq-100 Index(R), S&P 500 Index, FT Index, Hang Seng Index,
Ibbotson Small-Cap Index, MSCI Europe Index, a combination of the DJIA,
S&P 500 Index and Nasdaq-100 Index(R) (the "Cumulative Domestic Index
Returns") and a combination of the DJIA, FT Index and Hang Seng Index
(the "Cumulative International Index Returns") in each of the full years
listed below (and as of the most recent quarter).
These hypothetical returns should not be used to predict future
performance of the Trusts. Returns from a Trust will differ from its
strategy for several reasons, including the following:
- - Total Return figures shown do not reflect commissions paid by a Trust
on the purchase of Securities or taxes incurred by you.
- - Strategy returns are for calendar years (and through the most recent
quarter), while the Trusts begin and end on various dates.
- - Trusts have a maturity longer than one year.
- - Trusts may not be fully invested at all times or equally weighted in
each of the strategies or the stocks comprising their respective
strategy or strategies.
- - Securities are often purchased or sold at prices different from the
closing prices used in buying and selling Units.
- - For Trusts investing in foreign Securities, currency exchange rates
may differ.
You should note that the Trusts are not designed to parallel movements
in any index and it is not expected that they will do so. In fact, each
Trust's strategy underperformed its comparative index, or combination
thereof, in certain years and we cannot guarantee that a Trust will
outperform its respective index over the life of a Trust or over
consecutive rollover periods, if available. Each index differs widely in
size and focus, as described below.
DJIA. The DJIA consists of 30 U.S. stocks chosen by the editors of The
Wall Street Journal as being representative of the broad market and of
American industry. Changes in the component stocks of the DJIA are made
entirely by the editors of The Wall Street Journal without consulting
the companies, the stock exchange or any official agency. For the sake
of continuity, changes are made rarely.
Nasdaq-100 Index(R). The Nasdaq-100 Index(R) consists of the 100 largest
and most active non-financial domestic and international companies
listed on the Nasdaq National Market System.
S&P 500 Index. The S&P 500 Index consists of 500 stocks chosen by
Standard and Poor's to be representative of the leaders of various
industries.
Financial Times Industrial Ordinary Share Index. The FT Index consists
of 30 common stocks chosen by the editors of The Financial Times as
being representative of British industry and commerce.
Hang Seng Index. The Hang Seng Index consists of 33 of the stocks
currently listed on the Stock Exchange of Hong Kong Ltd. and is intended
to represent four major market sectors: commerce and industry, finance,
property and utilities.
Ibbotson Small-Cap Index. The Ibbotson Small-Cap Index is a market
capitalization weighted index of the ninth and tenth deciles of the New
York Stock Exchange, plus stocks listed on the American Stock Exchange
and over-the-counter with the same or less capitalization as the upper
bound of the NYSE ninth decile.
MSCI Europe Index. The MSCI Europe Index is an equity market
capitalization weighted index consisting of over 500 companies from all
of the developed markets in Europe.
Page 34
COMPARISON OF TOTAL RETURN(2)
(Strategy figures reflect the deduction of sales charges and expenses but not brokerage commissions or taxes.)
Hypothetical Strategy Total Returns(1)
The The The Target VIP Target VIP Value
Dow(sm) Dow(sm) European Global Nasdaq(R) The S&P Target Target Aggressive Conservative Total Line(R)
DART 5 DART 10 Target 20 Target 15 Target 15 Target 24 Small-Cap VIP Equity Equity Target Target 2
Year Strategy Strategy Strategy Strategy Strategy Strategy Strategy Strategy Strategy Strategy Strategy Strategy
____ ________ ________ ________ _________ _________ _________ _________ ________ ________ ____________ ________ ________
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Index Total Returns
Cumulative Cumulative
Nasdaq- Hang MSCI Ibboston Domestic International
100 S&P 500 Seng Europe Small-Cap Index Index
Year DJIA Index(R) Index FT Index Index Index Index Returns(3) Returns(4)
____ ____ ________ _______ ________ _______ _______ _________ __________ _________
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
Page 35
________________
<FN>
(1) The Strategy stocks for each Strategy for a given year consist of the
common stocks selected by applying the respective Strategy as of the
beginning of the period (and not the date the Trust actually sells Units).
(2) Total Return represents the sum of the change in market value of each
group of stocks between the first and last trading day of a period plus
the total dividends paid on each group of stocks during such period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return figures assume that all
dividends are reinvested semi-annually (except the FT Index and Hang
Seng Index from 12/31/79 through 12/31/86, during which time annual
reinvestment was assumed, and the MSCI Europe Index, which until
12/29/2000 assumed monthly reinvestment of dividends, and since
1/01/2001 assumes daily reinvestment of dividends) and all returns are
stated in terms of U.S. dollars. Strategy figures reflect the deduction
of sales charges and expenses but have not been reduced by estimated
brokerage commissions paid by Trusts in acquiring Securities or any
taxes incurred by investors. Based on the year-by-year returns contained
in the table, over the full years as listed above, The Dow(sm) DART 5
Strategy, The Dow(sm) DART 10 Strategy, the European Target 20 Strategy,
the Global Target 15 Strategy, The Nasdaq(R) Target 15 Strategy, The S&P
Target 24 Strategy, the Target Small-Cap Strategy, the Target VIP
Strategy, the Target VIP Aggressive Equity Strategy, the Target VIP
Conservative Equity Strategy, the Total Target Strategy and the Value
Line(R) Target 25 Strategy achieved an average annual total return of
_____%, _____%, _____%, _____%, _____%, _____%, _____%, _____%, _____%,
_____%, _____% and _____%, respectively. In addition, over this period,
each individual strategy except the Global Target 15 Strategy achieved a
greater average annual total return than that of its corresponding
index, the DJIA, the Nasdaq-100 Index(R), the S&P 500 Index (from
01/01/85 through 12/31/01); the S&P 500 Index (from 01/01/86 through
12/31/01); the MSCI Europe Index; the Ibbotson Small-Cap Index; the
combination of the DJIA, the S&P 500 Index and the Nasdaq-100 Index(R)
(the "Cumulative Domestic Index"); and the combination of the DJIA, the
FT Index and the Hang Seng Index (the "Cumulative International Index"),
which were _____%, _____%, _____%, _____%, _____%, _____%, _____% and
_____%, respectively.
(3) Cumulative Domestic Index Returns represent the weighted average of
the annual returns of the stocks contained in the DJIA, S&P 500 Index
and Nasdaq-100 Index(R). The Cumulative Domestic Index Returns are
weighted in the same proportions as the index components appear in the
Total Target Portfolio. For instance, the Cumulative Domestic Index is
weighted as follows: DJIA, 33-1/3%; S&P 500 Index, 33-1/3%; Nasdaq-100
Index(R), 33-1/3%. Cumulative Domestic Index Returns do not represent an
actual index.
(4) Cumulative International Index Returns represent the weighted
average of the annual returns of the stocks contained in the FT Index,
Hang Seng Index and DJIA. The Cumulative International Index Returns are
weighted in the same proportions as the index components appear in the
Global Target 15 Portfolio. For instance, the Cumulative International
Index is weighted as follows: DJIA, 33-1/3%; FT Index, 33-1/3%; Hang
Seng Index, 33-1/3%. Cumulative International Index Returns do not
represent an actual index.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
</FN>
Page 36
Public Offering
The Public Offering Price.
You may buy Units at the Public Offering Price, the price per Unit of
which is comprised of the following:
- - The aggregate underlying value of the Securities;
- - The amount of any cash in the Income and Capital Accounts;
- - Dividends receivable on Securities; and
- - The maximum transactional sales charge (which combines an initial
upfront sales charge and a deferred sales charge).
The price you pay for your Units will differ from the amount stated
under "Summary of Essential Information" due to various factors,
including fluctuations in the prices of the Securities, changes in the
relevant currency exchange rates, changes in the applicable commissions,
stamp taxes, custodial fees and other costs associated with foreign
trading, and changes in the value of the Income and/or Capital Accounts.
Although you are not required to pay for your Units until three business
days following your order (the "date of settlement"), you may pay before
then. You will become the owner of Units ("Record Owner") on the date of
settlement if payment has been received. If you pay for your Units
before the date of settlement, we may use your payment during this time
and it may be considered a benefit to us, subject to the limitations of
the Securities Exchange Act of 1934.
Organization Costs. Securities purchased with the portion of the Public
Offering Price intended to be used to reimburse the Sponsor for a
Trust's organization costs (including costs of preparing the
registration statement, the Indenture and other closing documents,
registering Units with the Securities and Exchange Commission ("SEC")
and states, the initial audit of each Trust portfolio, legal fees and
the initial fees and expenses of the Trustee) will be purchased in the
same proportionate relationship as all the Securities contained in a
Trust. Securities will be sold to reimburse the Sponsor for a Trust's
organization costs at the end of the initial offering period (a
significantly shorter time period than the life of the Trusts). During
the initial offering period, there may be a decrease in the value of the
Securities. To the extent the proceeds from the sale of these Securities
are insufficient to repay the Sponsor for Trust organization costs, the
Trustee will sell additional Securities to allow a Trust to fully
reimburse the Sponsor. In that event, the net asset value per Unit of a
Trust will be reduced by the amount of additional Securities sold.
Although the dollar amount of the reimbursement due to the Sponsor will
remain fixed and will never exceed the per Unit amount set forth for a
Trust in "Notes to Statements of Net Assets," this will result in a
greater effective cost per Unit to Unit holders for the reimbursement to
the Sponsor. To the extent actual organization costs are less than the
estimated amount, only the actual organization costs will be deducted
from the assets of a Trust. When Securities are sold to reimburse the
Sponsor for organization costs, the Trustee will sell Securities, to the
extent practicable, which will maintain the same proportionate
relationship among the Securities contained in a Trust as existed prior
to such sale.
Minimum Purchase.
The minimum amount you can purchase of a Trust is $1,000 worth of Units
($500 if you are purchasing Units for your Individual Retirement Account
or any other qualified retirement plan).
Transactional Sales Charge.
The transactional sales charge you will pay has both an initial and a
deferred component. The initial sales charge, which you will pay at the
time of purchase, is equal to the difference between the maximum
transactional sales charge of % of the Public Offering Price and the
maximum remaining deferred sales charge (initially $ per Unit). This
initial sales charge is equal to approximately 1.00% of the Public
Offering Price of a Unit, but will vary from 1.00% depending on the
purchase price of your Units and as deferred sales charge payments are
made. When the Public Offering Price per Unit exceeds $10.00, the
initial sales charge will exceed 1.00% of the Public Offering Price.
Monthly Deferred Sales Charge. In addition, three monthly deferred sales
charges of approximately $ per Unit will be deducted from a Trust's
assets on approximately the twentieth day of each month from ________,
2002 through ________, 2002. If you buy Units at a price of less than
$10.00 per Unit, the dollar amount of the deferred sales charge will not
change, but the deferred sales charge on a percentage basis will be more
than 1.70% of the Public Offering Price.
Discounts for Certain Persons.
If you invest at least $50,000 (except if you are purchasing for "Fee
Accounts" as described below) the maximum transactional sales charge is
reduced, as follows:
Page 37
Your maximum
If you invest transactional sales
(in thousands)* charge will be
_______________ ____________
$50 but less than $100 2.45%
$100 but less than $150 2.20%
$150 but less than $500 1.85%
$500 but less than $1,000 1.70%
$1,000 or more 0.95%
* Breakpoint transactional sales charges are also applied on a Unit
basis utilizing a breakpoint equivalent in the above table of $10 per
Unit and will be applied on whichever basis is more favorable to the
investor. The breakpoints will be adjusted to take into consideration
purchase orders stated in dollars which cannot be completely fulfilled
due to the requirement that only whole Units be issued.
The reduced transactional sales charge for quantity purchases will apply
only to purchases made by the same person on any one day from any one
dealer. To help you reach the above levels, you can combine the Units
you purchase of the Trusts in this prospectus with any other same day
purchases of other trusts for which we are Principal Underwriter and are
currently in the initial offering period. In addition, we will also
consider Units you purchase in the name of your spouse or child under 21
years of age to be purchases by you. The reduced transactional sales
charges will also apply to a trustee or other fiduciary purchasing Units
for a single trust estate or single fiduciary account. You must inform
your dealer of any combined purchases before the sale in order to be
eligible for the reduced transactional sales charge. Any reduced
transactional sales charge is the responsibility of the party making the
sale.
If you commit to purchase Units of the Trusts, or subsequent series of
the Trusts, valued at $1,000,000 or more over a 12-month period,
commencing with your first purchase you will receive the reduced
transactional sales charge set forth above on all individual purchases
over $83,000.
You may use your Rollover proceeds from a previous series of a Trust,
termination proceeds from other unit investment trusts with a similar
strategy as a Trust, or redemption or termination proceeds from any unit
investment trust we sponsor to purchase Units of a Trust during the
initial offering period at the Public Offering Price less 1.00% (for
purchases of $1,000,000 or more, the deferred sales charge will be
limited to 0.95% of the Public Offering Price), but you will not be
eligible to receive the reduced transactional sales charges described in
the above table. Please note that if you purchase Units of a Trust in
this manner using redemption proceeds from trusts which assess the
amount of any remaining deferred sales charge at redemption, you should
be aware that any deferred sales charge remaining on these units will be
deducted from those redemption proceeds.
Investors purchasing Units through registered broker/dealers who charge
periodic fees in lieu of commissions or who charge for financial
planning, investment advisory or asset management services or provide
these or comparable services as part of an investment account where a
comprehensive "wrap fee" or similar charge is imposed ("Fee Accounts")
will not be assessed the transactional sales charge described in this
section on the purchase of Units. We reserve the right to limit or deny
purchases of Units not subject to the transactional sales charge by
investors whose frequent trading activity we determine to be detrimental
to the Trusts.
Employees, officers and directors (and immediate family members) of the
Sponsor, our related companies, dealers and their affiliates, and
vendors providing services to us may purchase Units at the Public
Offering Price less the applicable dealer concession. Immediate family
members include spouses, children, grandchildren, parents, grandparents,
siblings, mothers-in-law, fathers-in-law, sons-in-law, daughters-in-law,
brothers-in-law and sisters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons.
The Sponsor and certain dealers may establish a schedule where
employees, officers and directors of such dealers can purchase Units of
a Trust at the Public Offering Price less the established schedule
amount, which is designed to compensate such dealers for activities
relating to the sale of Units (the "Employee Dealer Concession").
You will be charged the deferred sales charge per Unit regardless of any
discounts. However, if you are eligible to receive a discount such that
the maximum transactional sales charge you must pay is less than the
applicable maximum deferred sales charge, including Fee Accounts Units,
you will be credited the difference between your maximum transactional
sales charge and the maximum deferred sales charge at the time you buy
your Units. If you elect to have distributions reinvested into
additional Units of your Trust, in addition to the reinvestment Units
you receive you will also be credited additional Units with a dollar
value at the time of reinvestment sufficient to cover the amount of any
remaining deferred sales charge to be collected on such reinvestment
Units. The dollar value of these additional credited Units (as with all
Units) will fluctuate over time, and may be less on the dates deferred
sales charges are collected than their value at the time they were issued.
As Sponsor, we will also receive, and the Unit holders will pay, a
creation and development fee. See "Expenses and Charges" for a
description of the services provided for this fee.
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The Value of the Securities.
The Evaluator will determine the aggregate underlying value of the
Securities in a Trust as of the Evaluation Time on each business day and
will adjust the Public Offering Price of the Units according to this
valuation. This Public Offering Price will be effective for all orders
received before the Evaluation Time on each such day. If we or the
Trustee receive orders for purchases, sales or redemptions after that
time, or on a day which is not a business day, they will be held until
the next determination of price. The term "business day" as used in this
prospectus will exclude Saturdays, Sundays and certain national holidays
on which the NYSE is closed.
The aggregate underlying value of the Securities in a Trust will be
determined as follows: if the Securities are listed on a securities
exchange or The Nasdaq Stock Market, their value is generally based on
the closing sale prices on that exchange or system (unless it is
determined that these prices are not appropriate as a basis for
valuation). However, if there is no closing sale price on that exchange
or system, they are valued based on the closing ask prices. If the
Securities are not so listed, or, if so listed and the principal market
for them is other than on that exchange or system, their value will
generally be based on the current ask prices on the over-the-counter
market (unless it is determined that these prices are not appropriate as
a basis for valuation). If current ask prices are unavailable, the
valuation is generally determined:
a) On the basis of current ask prices for comparable securities;
b) By appraising the value of the Securities on the ask side of the
market; or
c) By any combination of the above.
The total value of non-U.S. listed Securities in the European Target 20
Portfolio, the Global Target 15 Portfolio, the Target VIP Portfolio, the
Target VIP Aggressive Equity Portfolio and the Target VIP Conservative
Equity Portfolio during the initial offering period is computed on the
basis of the offering side value of the relevant currency exchange rate
expressed in U.S. dollars as of the Evaluation Time.
After the initial offering period is over, the aggregate underlying
value of the Securities will be determined as set forth above, except
that bid prices are used instead of ask prices when necessary. In
addition, during this period the aggregate underlying value of non-U.S.
listed Securities is computed on the basis of the bid side value of the
relevant currency exchange rate expressed in U.S. dollars as of the
Evaluation Time.
Distribution of Units
We intend to qualify Units of the Trusts for sale in a number of states.
All Units will be sold at the then current Public Offering Price.
Dealer Concessions.
Dealers and other selling agents can purchase Units at prices which
reflect a concession or agency commission of 2.25% of the Public
Offering Price per Unit. However, for Units subject to a transactional
sales charge which are purchased using redemption or termination
proceeds or on purchases by Rollover Unit holders, this amount will be
reduced to 1.3% of the sales price of these Units (0.5% for purchases of
$1,000,000 or more).
Eligible dealer firms and other selling agents who sell Units of a Trust
during the initial offering period in the dollar amounts shown below
will be entitled to the following additional sales concessions as a
percentage of the Public Offering Price:
Total sales per Trust Additional
(in millions) Concession
_____________________ ___________
$1 but less than $3 0.05%
$3 but less than $5 0.10%
$5 or more 0.15%
Dealers and other selling agents will not receive a concession on the
sale of Units which are not subject to the transactional sales charge,
but such Units will be included in determining whether the above volume
sales levels are met. Eligible dealer firms and other selling agents
include entities that are providing marketing support for First Trust
unit investment trusts by distributing or permitting the distribution of
marketing materials and other product information. Eligible dealer firms
and other selling agents will not include firms that solely provide
clearing services to other broker/dealer firms. Dealers and other
selling agents who, during any consecutive 12-month period, sell at
least $250 million or $500 million worth of primary market units of unit
investment trusts sponsored by us will receive a concession of $2,500 or
$5,000, respectively, in the month following the achievement of this
level. We reserve the right to change the amount of concessions or
agency commissions from time to time. Certain commercial banks may be
making Units of the Trusts available to their customers on an agency
basis. A portion of the transactional sales charge paid by these
customers is kept by or given to the banks in the amounts shown above.
Page 39
Award Programs.
From time to time we may sponsor programs which provide awards to a
dealer's registered representatives who have sold a minimum number of
Units during a specified time period. We may also pay fees to qualifying
dealers for services or activities which are meant to result in sales of
Units of the Trusts. In addition, we will pay to dealers who sponsor
sales contests or recognition programs that conform to our criteria, or
participate in our sales programs, amounts equal to no more than the
total applicable transactional sales charge on Units sold by such
persons during such programs. We make these payments out of our own
assets and not out of Trust assets. These programs will not change the
price you pay for your Units.
Advertising and Investment Comparisons.
Advertising materials regarding a Trust may discuss several topics,
including: developing a long-term financial plan; working with your
financial professional; the nature and risks of various investment
strategies and unit investment trusts that could help you reach your
financial goals; the importance of discipline; how a Trust operates; how
securities are selected; various unit investment trust features such as
convenience and costs; and options available for certain types of unit
investment trusts. These materials may include descriptions of the
principal businesses of the companies represented in each Trust,
research analysis of why they were selected and information relating to
the qualifications of the persons or entities providing the research
analysis. In addition, they may include research opinions on the economy
and industry sectors included and a list of investment products
generally appropriate for pursuing those recommendations.
From time to time we may compare the estimated returns of a Trust (which
may show performance net of the expenses and charges a Trust would have
incurred) and returns over specified periods of other similar trusts we
sponsor in our advertising and sales materials, with (1) returns on
other taxable investments such as the common stocks comprising various
market indexes, corporate or U.S. Government bonds, bank CDs and money
market accounts or funds, (2) performance data from Morningstar
Publications, Inc. or (3) information from publications such as Money,
The New York Times, U.S. News and World Report, BusinessWeek, Forbes or
Fortune. The investment characteristics of each Trust differ from other
comparative investments. You should not assume that these performance
comparisons will be representative of a Trust's future performance. We
may also, from time to time, use advertising which classifies trusts
according to capitalization and/or investment style.
The Sponsor's Profits
We will receive a gross sales commission equal to the maximum
transactional sales charge per Unit for each Trust less any reduction as
stated in "Public Offering." We will also receive the amount of any
accrued and collected creation and development fee. Also, any difference
between our cost to purchase the Securities and the price at which we
sell them to a Trust is considered a profit or loss (see Note 2 of
"Notes to Schedules of Investments"). During the initial offering
period, dealers and others may also realize profits or sustain losses as
a result of fluctuations in the Public Offering Price they receive when
they sell the Units.
In maintaining a market for the Units, any difference between the price
at which we purchase Units and the price at which we sell or redeem them
will be a profit or loss to us.
The Secondary Market
Although not obligated, we intend to maintain a market for the Units
after the initial offering period and continuously offer to purchase
Units at prices based on the Redemption Price per Unit.
We will pay all expenses to maintain a secondary market, except the
Evaluator fees and Trustee costs to transfer and record the ownership of
Units. We may discontinue purchases of Units at any time. IF YOU WISH TO
DISPOSE OF YOUR UNITS, YOU SHOULD ASK US FOR THE CURRENT MARKET PRICES
BEFORE MAKING A TENDER FOR REDEMPTION TO THE TRUSTEE. If you sell or
redeem your Units before you have paid the total deferred sales charge
on your Units, you will have to pay the remainder at that time.
How We Purchase Units
The Trustee will notify us of any tender of Units for redemption. If our
bid at that time is equal to or greater than the Redemption Price per
Unit, we may purchase the Units. You will receive your proceeds from the
sale no later than if they were redeemed by the Trustee. We may tender
Units we hold to the Trustee for redemption as any other Units. If we
elect not to purchase Units, the Trustee may sell tendered Units in the
over-the-counter market, if any. However, the amount you will receive is
the same as you would have received on redemption of the Units.
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Expenses and Charges
The estimated annual expenses of each Trust are listed under "Fee
Table." If actual expenses of a Trust exceed the estimate, that Trust
will bear the excess. The Trustee will pay operating expenses of the
Trusts from the Income Account of such Trust if funds are available, and
then from the Capital Account. The Income and Capital Accounts are
noninterest-bearing to Unit holders, so the Trustee may earn interest on
these funds, thus benefiting from their use.
First Trust Advisors L.P., an affiliate of ours, will be compensated for
providing bookkeeping and other administrative services to the Trusts,
and, as Sponsor, we will receive brokerage fees when a Trust uses us (or
an affiliate of ours) as agent in buying or selling Securities. In
addition, First Trust Advisors L.P. acts as both Portfolio Supervisor
and Evaluator to the Trusts and will receive the fees set forth under
"Fee Table" for providing portfolio supervisory and evaluation services
to the Trusts. In providing portfolio supervisory services, the
Portfolio Supervisor may purchase research services from a number of
sources, which may include underwriters or dealers of the Trusts.
The fees payable to First Trust Advisors L.P. and the Trustee are based
on the largest aggregate number of Units of a Trust outstanding at any
time during the calendar year, except during the initial offering
period, in which case these fees are calculated based on the largest
number of Units outstanding during the period for which compensation is
paid. These fees may be adjusted for inflation without Unit holders'
approval, but in no case will the annual fee paid to us or our
affiliates for providing a given service to all unit investment trusts
for which we provide such services be more than the actual cost of
providing such services in such year.
As Sponsor, we will receive a fee from each Trust for creating and
developing the Trusts, including determining each Trust's objectives,
policies, composition and size, selecting service providers and
information services and for providing other similar administrative and
ministerial functions. The "creation and development fee" is a charge of
.25% of a Trust's average daily net asset value through the date of
collection. In connection with the creation and development fee, in no
event will the Sponsor collect more than .25% of a Unit holder's initial
investment. We do not use this fee to pay distribution expenses or as
compensation for sales efforts.
In addition to a Trust's operating expenses and those fees described
above, the Trusts may also incur the following charges:
- - A quarterly license fee (which will fluctuate with a Trust's net asset
value) payable by certain of the Trusts for the use of certain
trademarks and trade names of Dow Jones, Standard & Poor's, The Nasdaq
Stock Market, Inc. and/or Value Line;
- - All legal expenses of the Trustee according to its responsibilities
under the Indenture;
- - The expenses and costs incurred by the Trustee to protect a Trust and
your rights and interests;
- - Fees for any extraordinary services the Trustee performed under the
Indenture;
- - Payment for any loss, liability or expense the Trustee incurred
without negligence, bad faith or willful misconduct on its part, in
connection with its acceptance or administration of a Trust;
- - Payment for any loss, liability or expenses we incurred without
negligence, bad faith or willful misconduct in acting as Depositor of a
Trust;
- - Foreign custodial and transaction fees, if any; and/or
- - All taxes and other government charges imposed upon the Securities or
any part of a Trust.
The above expenses and the Trustee's annual fee are secured by a lien on
the Trusts. Since the Securities are all common stocks and dividend
income is unpredictable, we cannot guarantee that dividends will be
sufficient to meet any or all expenses of the Trusts. If there is not
enough cash in the Income or Capital Accounts, the Trustee has the power
to sell Securities in a Trust to make cash available to pay these
charges which may result in capital gains or losses to you. See "Tax
Status."
Tax Status
United States Taxation.
This section summarizes some of the main U.S. federal income tax
consequences of owning Units of the Trusts. This section is current as
of the date of this prospectus. Tax laws and interpretations change
frequently, and these summaries do not describe all of the tax
consequences to all taxpayers. For example, these summaries generally do
not describe your situation if you are a corporation, a non-U.S. person,
a broker-dealer, or other investor with special circumstances. In
addition, this section does not describe your state or foreign taxes. As
with any investment, you should consult your own tax professional about
your particular consequences. In addition, the Internal Revenue Service
issued new withholding and reporting regulations effective January 1,
2001. Foreign investors should consult their own tax advisors regarding
the tax consequences of these regulations.
Page 41
Trust Status. The Trusts will not be taxed as corporations for federal
income tax purposes. As a Unit owner, you will be treated as the owner
of a pro rata portion of the Securities and other assets held by a
Trust, and as such you will be considered to have received a pro rata
share of income (e.g., dividends and capital gains, if any) from each
Security when such income would be considered to be received by you if
you directly owned a Trust's assets. This is true even if you elect to
have your distributions automatically reinvested into additional Units.
In addition, the income from the Trust which you must take into account
for federal income tax purposes is not reduced by amounts used to pay
Trust expenses (including the deferred sales charge, if any).
Your Tax Basis and Income or Loss upon Disposition. If your Trust
disposes of Securities, you will generally recognize gain or loss. If
you dispose of your Units or redeem your Units for cash, you will also
generally recognize gain or loss. To determine the amount of this gain
or loss, you must subtract your tax basis in the related Securities from
your share of the total amount received in the transaction. You can
generally determine your initial tax basis in each Security or other
Trust asset by apportioning the cost of your Units, generally including
sales charges, among each Security or other Trust asset ratably
according to their value on the date you purchase your Units. In certain
circumstances, however, you may have to adjust your tax basis after you
purchase your Units (for example, in the case of certain dividends that
exceed a corporation's accumulated earnings and profits).
If you are an individual, the maximum marginal federal tax rate for net
capital gain is generally 20% (10% for certain taxpayers in the 10% and
15% tax brackets). The 20% rate is reduced to 18% and the 10% rate is
reduced to 8% for long-term gains from most property acquired after
December 31, 2000 with a holding period of more than five years. Because
the Trusts have a maturity of less than five years, the reduction in the
capital gains rate for property held for more than five years could only
possibly apply to your interest in the Securities if you are eligible
for and elect to receive an In-Kind Distribution at redemption or
termination.
Net capital gain equals net long-term capital gain minus net short-term
capital loss for the taxable year. Capital gain or loss is long-term if
the holding period for the asset is more than one year and is short-term
if the holding period for the asset is one year or less. You must
exclude the date you purchase your Units to determine your holding
period. The tax rates for capital gains realized from assets held for
one year or less are generally the same as for ordinary income. The
Internal Revenue Code, however, treats certain capital gains as ordinary
income in special situations.
Rollovers. If you elect to have your proceeds from a Trust rolled over
into the next series of such Trust, it is considered a sale for federal
income tax purposes, and any gain on the sale will be treated as a
capital gain, and any loss will be treated as a capital loss. However,
any loss you incur in connection with the exchange of your Units of a
Trust for units of the next series will generally be disallowed with
respect to this deemed sale and subsequent deemed repurchase, to the
extent the two trusts have substantially identical Securities or other
Trust assets under the wash sale provisions of the Internal Revenue Code.
In-Kind Distributions. Under certain circumstances, as described in this
prospectus, you may request a distribution of Securities (an "In-Kind
Distribution") from any of the Trusts except the European Target 20
Portfolio or the Global Target 15 Portfolio when you redeem your Units
or at a Trust's termination. By electing to receive an In-Kind
Distribution, you will receive whole shares of stock plus, possibly, cash.
You will not recognize gain or loss if you only receive Securities in
exchange for your pro rata portion of the Securities held by a Trust.
However, if you also receive cash in exchange for a Trust asset or a
fractional share of a Trust asset or a Security held by such Trust, you
will generally recognize gain or loss based on the difference between
the amount of cash you receive and your tax basis in such Trust asset or
fractional share.
Limitations on the Deductibility of Trust Expenses. Generally, for
federal income tax purposes, you must take into account your full pro
rata share of a Trust's income, even if some of that income is used to
pay Trust expenses. You may deduct your pro rata share of each expense
paid by a Trust to the same extent as if you directly paid the expense.
You may, however, be required to treat some or all of the expenses of a
Trust as miscellaneous itemized deductions. Individuals may only deduct
certain miscellaneous itemized deductions to the extent they exceed 2%
of adjusted gross income.
Foreign, State and Local Taxes. Distributions by a Trust that are
treated as U.S. source income (e.g., dividends received on Securities of
domestic corporations) will generally be subject to U.S. income taxation
and withholding in the case of Units held by non-resident alien
individuals, foreign corporations or other non-U.S. persons, subject to
any applicable treaty. However, distributions by a Trust that are
derived from certain dividends of Securities of a foreign corporation
may not be subject to U.S. income taxation and withholding in the case
Page 42
of Units held by non-resident alien individuals, foreign corporations or
other U.S. persons.
Some distributions by a Trust may be subject to foreign withholding
taxes. Any dividends withheld will nevertheless be treated as income to
you. However, because you are deemed to have paid directly your share of
foreign taxes that have been paid or accrued by a Trust, you may be
entitled to a foreign tax credit or deduction for U.S. tax purposes with
respect to such taxes.
Under the existing income tax laws of the State and City of New York,
the Trusts will not be taxed as corporations, and the income of the
Trusts will be treated as the income of the Unit holders in the same
manner as for federal income tax purposes.
United Kingdom Taxation.
The following summary describes certain important U.K. tax consequences
for certain U.S. Unit holders who hold Units in the European Target 20
Portfolio, the Global Target 15 Portfolio or the Target VIP Portfolio as
capital assets. This summary is intended to be a general guide only and
is subject to any changes in law occurring after the date of this
prospectus. You should consult your own tax advisor about your
particular circumstances.
Taxation of Dividends. A U.K. resident individual who receives a
dividend from a U.K. company is generally entitled to a tax credit which
is offset against U.K. tax liabilities.
You will not be able to claim any refund of the tax credit for dividends
paid by U.K. companies.
Taxation of Capital Gains. U.S. investors who are neither resident nor
ordinarily resident in the United Kingdom will not generally be liable
for U.K. tax on gains arising on the disposal of Units in the European
Target 20 Portfolio, the Global Target 15 Portfolio or the Target VIP
Portfolio. However, they may be liable if the Units are used, held or
acquired for the purposes of a trade, profession or vocation carried on
in the United Kingdom. Individual U.S. investors may also be liable if
they have previously been resident or ordinarily resident in the United
Kingdom and become resident or ordinarily resident in the United Kingdom
in the future.
Inheritance Tax. Individual U.S. investors who are domiciled in the
United States and who are not U.K. nationals will generally not be
subject to U.K. inheritance tax on death or on gifts of the Units made
during their lifetimes, provided any applicable U.S. federal gift or
estate tax is paid. They may be subject to U.K. inheritance tax if the
Units are used in a business in the United Kingdom or relate to the
performance of personal services in the United Kingdom.
Where the Units are held on trust, the Units will generally not be
subject to U.K. inheritance tax unless the settlor, at the time of
settlement, was domiciled in the United Kingdom, in which case they may
be subject to tax.
It is very unlikely that the Units will be subject to both U.K.
inheritance tax and U.S. federal gift or estate tax. If they were, one
of the taxes could generally be credited against the other.
Stamp Tax. A sale of Securities listed in the FT Index will generally
result in either U.K. stamp duty or stamp duty reserve tax being payable
by the purchaser. The European Target 20 Portfolio, the Global Target 15
Portfolio and the Target VIP Portfolio each paid this tax when they
acquired Securities. When the European Target 20 Portfolio, the Global
Target 15 Portfolio and the Target VIP Portfolio sell Securities, it is
anticipated that the tax will be paid by the purchaser.
Hong Kong Taxation.
The following summary describes certain important Hong Kong tax
consequences to certain U.S. Unit holders who hold Units in the Global
Target 15 Portfolio as capital assets. This summary assumes that you are
not carrying on a trade, profession or business in Hong Kong and that
you have no profits sourced in Hong Kong arising from the carrying on of
such trade, profession or business. This summary is intended to be a
general guide only and is subject to any changes in Hong Kong or U.S.
law occurring after the date of this prospectus and you should consult
your own tax advisor about your particular circumstances.
Taxation of Dividends. Dividends you receive from the Global Target 15
Portfolio relating to Hong Kong issuers are not taxable and therefore
will not be subject to the deduction of any withholding tax.
Profits Tax. Unless you are carrying on a trade, profession or business
in Hong Kong you will not be subject to profits tax imposed by Hong Kong
on any gain or profits made on the realization or other disposal of your
Units.
Estate Duty. Units of the Global Target 15 Portfolio do not give rise to
Hong Kong estate duty liability.
Retirement Plans
You may purchase Units of the Trusts for:
- - Individual Retirement Accounts;
- - Keogh Plans;
- - Pension funds; and
- - Other tax-deferred retirement plans.
Page 43
Generally, the federal income tax on capital gains and income received
in each of the above plans is deferred until you receive distributions.
These distributions are generally treated as ordinary income but may, in
some cases, be eligible for special averaging or tax-deferred rollover
treatment. Before participating in a plan like this, you should review
the tax laws regarding these plans and consult your attorney or tax
advisor. Brokerage firms and other financial institutions offer these
plans with varying fees and charges.
Rights of Unit Holders
Unit Ownership.
The Trustee will treat as Record Owner of Units persons registered as
such on its books. It is your responsibility to notify the Trustee when
you become Record Owner, but normally your broker/dealer provides this
notice. You may elect to hold your Units in either certificated or
uncertificated form. All Fee Accounts Units, however, will be held in
uncertificated form.
Certificated Units. When you purchase your Units you can request that
they be evidenced by certificates, which will be delivered shortly after
your order. Certificates will be issued in fully registered form,
transferable only on the books of the Trustee in denominations of one
Unit or any multiple thereof. You can transfer or redeem your
certificated Units by endorsing and surrendering the certificate to the
Trustee, along with a written instrument of transfer. You must sign your
name exactly as it appears on the face of the certificate with signature
guaranteed by an eligible institution. In certain cases the Trustee may
require additional documentation before they will transfer or redeem
your Units.
You may be required to pay a nominal fee to the Trustee for each
certificate reissued or transferred, and to pay any government charge
that may be imposed for each transfer or exchange. If a certificate gets
lost, stolen or destroyed, you may be required to furnish indemnity to
the Trustee to receive replacement certificates. You must surrender
mutilated certificates to the Trustee for replacement.
Uncertificated Units. You may also choose to hold your Units in
uncertificated form. If you choose this option, the Trustee will
establish an account for you and credit your account with the number of
Units you purchase. Within two business days of the issuance or transfer
of Units held in uncertificated form, the Trustee will send you:
- - A written initial transaction statement containing a description of
your Trust;
- - A list of the number of Units issued or transferred;
- - Your name, address and Taxpayer Identification Number ("TIN");
- - A notation of any liens or restrictions of the issuer and any adverse
claims; and
- - The date the transfer was registered.
Uncertificated Units may be transferred the same way as certificated
Units, except that no certificate needs to be presented to the Trustee.
Also, no certificate will be issued when the transfer takes place unless
you request it. You may at any time request that the Trustee issue
certificates for your Units.
Unit Holder Reports.
In connection with each distribution, the Trustee will provide you with
a statement detailing the per Unit amount of income (if any)
distributed. After the end of each calendar year, the Trustee will
provide you with the following information:
- - A summary of transactions in your Trust for the year;
- - A list of any Securities sold during the year and the Securities held
at the end of that year by your Trust;
- - The Redemption Price per Unit, computed on the 31st day of December of
such year (or the last business day before); and
- - Amounts of income and capital distributed during the year.
You may request from the Trustee copies of the evaluations of the
Securities as prepared by the Evaluator to enable you to comply with
federal and state tax reporting requirements.
Income and Capital Distributions
You will begin receiving distributions on your Units only after you
become a Record Owner. The Trustee will credit dividends received on a
Trust's Securities to the Income Account of such Trust. All other
receipts, such as return of capital, are credited to the Capital Account
of such Trust. Dividends received on foreign Securities, if any, are
converted into U.S. dollars at the applicable exchange rate.
The Trustee will distribute any net income in the Income Account on or
near the Income Distribution Dates to Unit holders of record on the
preceding Income Distribution Record Date. See "Summary of Essential
Information." No income distribution will be paid if accrued expenses of
a Trust exceed amounts in the Income Account on the Income Distribution
Dates. Distribution amounts will vary with changes in a Trust's fees and
expenses, in dividends received and with the sale of Securities. The
Page 44
Trustee will distribute amounts in the Capital Account, net of amounts
designated to meet redemptions, pay the deferred sales charge or pay
expenses, on the last day of each month to Unit holders of record on the
fifteenth day of each month provided the amount equals at least $1.00
per 100 Units. If the Trustee does not have your TIN, it is required to
withhold a certain percentage of your distribution and deliver such
amount to the Internal Revenue Service ("IRS"). You may recover this
amount by giving your TIN to the Trustee, or when you file a tax return.
However, you should check your statements to make sure the Trustee has
your TIN to avoid this "back-up withholding."
We anticipate that there will be enough money in the Capital Account of
a Trust to pay the deferred sales charge. If not, the Trustee may sell
Securities to meet the shortfall.
Within a reasonable time after a Trust is terminated, unless you are a
Rollover Unit holder, you will receive the pro rata share of the money
from the sale of the Securities. However, if you own Units of any of the
Trusts except the European Target 20 Portfolio or the Global Target 15
Portfolio, you may elect to receive an In-Kind Distribution as described
under "Amending or Terminating the Indenture." All Unit holders will
receive a pro rata share of any other assets remaining in their Trust,
after deducting any unpaid expenses.
The Trustee may establish reserves (the "Reserve Account") within a
Trust to cover anticipated state and local taxes or any governmental
charges to be paid out of that Trust.
Distribution Reinvestment Option. You may elect to have each
distribution of income and/or capital reinvested into additional Units
of your Trust by notifying the Trustee at least 10 days before any
Record Date. Each later distribution of income and/or capital on your
Units will be reinvested by the Trustee into additional Units of your
Trust. There is no transactional sales charge on Units acquired through
the Distribution Reinvestment Option, as discussed under "Public
Offering." This option may not be available in all states. PLEASE NOTE
THAT EVEN IF YOU REINVEST DISTRIBUTIONS, THEY ARE STILL CONSIDERED
DISTRIBUTIONS FOR INCOME TAX PURPOSES.
Redeeming Your Units
You may redeem all or a portion of your Units at any time by sending the
certificates representing the Units you want to redeem to the Trustee at
its unit investment trust office. If your Units are uncertificated, you
need only deliver a request for redemption to the Trustee. In either
case, the certificates or the redemption request must be properly
endorsed with proper instruments of transfer and signature guarantees as
explained in "Rights of Unit Holders-Unit Ownership" (or by providing
satisfactory indemnity if the certificates were lost, stolen, or
destroyed). No redemption fee will be charged, but you are responsible
for any governmental charges that apply. Certain broker/dealers may
charge a transaction fee for processing redemption requests. Units
redeemed directly through the Trustee are not subject to such
transaction fees. Three business days after the day you tender your
Units (the "Date of Tender") you will receive cash in an amount for each
Unit equal to the Redemption Price per Unit calculated at the Evaluation
Time on the Date of Tender.
The Date of Tender is considered to be the date on which the Trustee
receives your certificates or redemption request (if such day is a day
the NYSE is open for trading). However, if your certificates or
redemption request are received after 4:00 p.m. Eastern time (or after
any earlier closing time on a day on which the NYSE is scheduled in
advance to close at such earlier time), the Date of Tender is the next
day the NYSE is open for trading.
Any amounts paid on redemption representing income will be withdrawn
from the Income Account of a Trust if funds are available for that
purpose, or from the Capital Account. All other amounts paid on
redemption will be taken from the Capital Account of a Trust. The IRS
will require the Trustee to withhold a portion of your redemption
proceeds if the Trustee does not have your TIN as generally discussed
under "Income and Capital Distributions."
If you tender at least 2,500 Units of The Dowsm(sm) DART 5 Portfolio,
the Target Small-Cap Portfolio or the Total Target Portfolio, or 5,000
Units of the Target VIP Portfolio, the Target VIP Aggressive Equity
Portfolio or the Target VIP Conservative Equity Portfolio or such other
amount as required by your broker/dealer, for redemption, rather than
receiving cash, you may elect to receive an In-Kind Distribution in an
amount equal to the Redemption Price per Unit by making this request in
writing to the Trustee at the time of tender. However, to be eligible to
participate in the In-Kind Distribution option at redemption, Fee Accounts
Unit holders must hold their Units through the end of the initial offering
period. No In-Kind Distribution requests submitted during the nine business
days prior to a Trust's Mandatory Termination Date will be honored. Where
possible, the Trustee will make an In-Kind Distribution by distributing
each of the Securities in book-entry form to your bank or broker/dealer
Oage 45
account at the Depository Trust Company. This option is generally eligible
only for stocks traded and held in the United States, thus excluding most
foreign Securities. The Trustee will subtract any customary transfer and
registration charges from your In-Kind Distribution. As a tendering Unit
holder, you will receive your pro rata number of whole shares of the
eligible Securities that make up the portfolio, and cash from the
Capital Account equal to the non-eligible Securities and fractional
shares to which you are entitled.
The Trustee may sell Securities to make funds available for redemption.
If Securities are sold, the size and diversification of a Trust will be
reduced. These sales may result in lower prices than if the Securities
were sold at a different time.
Your right to redeem Units (and therefore, your right to receive
payment) may be delayed:
- - If the NYSE is closed (other than customary weekend and holiday
closings);
- - If the SEC determines that trading on the NYSE is restricted or that
an emergency exists making sale or evaluation of the Securities not
reasonably practical; or
- - For any other period permitted by SEC order.
The Trustee is not liable to any person for any loss or damage which may
result from such a suspension or postponement.
The Redemption Price.
The Redemption Price per Unit is determined by the Trustee by:
adding
1. cash in the Income and Capital Accounts of a Trust not designated to
purchase Securities;
2. the aggregate underlying value of the Securities held in that Trust;
and
3. dividends receivable on the Securities trading ex-dividend as of the
date of computation; and
deducting
1. any applicable taxes or governmental charges that need to be paid out
of such Trust;
2. any amounts owed to the Trustee for its advances;
3. estimated accrued expenses of such Trust, if any;
4. cash held for distribution to Unit holders of record of such Trust as
of the business day before the evaluation being made;
5. liquidation costs for foreign Securities, if any; and
6. other liabilities incurred by such Trust; and
dividing
1. the result by the number of outstanding Units of such Trust.
Any remaining deferred sales charge on the Units when you redeem them
will be deducted from your redemption proceeds. In addition, during the
initial offering period, the Redemption Price per Unit will include
estimated organization costs as set forth under "Fee Table."
Investing in a New Trust
Each Trust's portfolio has been selected on the basis of capital
appreciation potential for a limited time period. When each Trust is
about to terminate, you may have the option to roll your proceeds into
the next series of a Trust (the "New Trusts") if one is available. We
intend to create the New Trusts in conjunction with the termination of
the Trusts and plan to apply the same strategy we used to select the
portfolio for the Trusts to the New Trusts.
If you wish to have the proceeds from your Units rolled into a New Trust
you must notify the Trustee in writing of your election by the Rollover
Notification Date stated in the "Summary of Essential Information." As a
Rollover Unit holder, your Units will be redeemed and the underlying
Securities sold by the Trustee, in its capacity as Distribution Agent,
during the Special Redemption and Liquidation Period. The Distribution
Agent may engage us or other brokers as its agent to sell the Securities.
Once all of the Securities are sold, your proceeds, less any brokerage
fees, governmental charges or other expenses involved in the sales, will
be used to buy units of a New Trust or trust with a similar investment
strategy that you have selected, provided such trusts are registered and
being offered. Accordingly, proceeds may be uninvested for up to several
days. Units purchased with rollover proceeds will generally be purchased
subject to the maximum remaining deferred sales charge on such units
(currently expected to be $ per unit), but not the initial sales
charge. Units purchased using proceeds from Fee Accounts Units will
generally not be subject to any transactional sales charge.
We intend to create New Trust units as quickly as possible, depending on
the availability of the Securities contained in a New Trust's portfolio.
Rollover Unit holders will be given first priority to purchase New Trust
units. We cannot, however, assure the exact timing of the creation of
New Trust units or the total number of New Trust units we will create.
Any proceeds not invested on behalf of Rollover Unit holders in New
Trust units will be distributed within a reasonable time after such
occurrence. Although we believe that enough New Trust units can be
Page 46
created, monies in a New Trust may not be fully invested on the next
business day.
Please note that there are certain tax consequences associated with
becoming a Rollover Unit holder. See "Tax Status." If you elect not to
participate as a Rollover Unit holder ("Remaining Unit holders"), you
will not incur capital gains or losses due to the Special Redemption and
Liquidation, nor will you be charged any additional transactional sales
charge. We may modify, amend or terminate this rollover option upon 60
days notice.
Removing Securities from a Trust
The portfolios of the Trusts are not managed. However, we may, but are
not required to, direct the Trustee to dispose of a Security in certain
limited circumstances, including situations in which:
- - The issuer of the Security defaults in the payment of a declared
dividend;
- - Any action or proceeding prevents the payment of dividends;
- - There is any legal question or impediment affecting the Security;
- - The issuer of the Security has breached a covenant which would affect
the payment of dividends, the issuer's credit standing, or otherwise
damage the sound investment character of the Security;
- - The issuer has defaulted on the payment of any other of its
outstanding obligations;
- - There has been a public tender offer made for a Security or a merger
or acquisition is announced affecting a Security, and that in our
opinion the sale or tender of the Security is in the best interest of
Unit holders; or
- - The price of the Security has declined to such an extent, or such
other credit factors exist, that in our opinion keeping the Security
would be harmful to a Trust.
Except in the limited instance in which a Trust acquires Replacement
Securities, as described in "The FT Series," a Trust may not acquire any
securities or other property other than the Securities. The Trustee, on
behalf of a Trust, will reject any offer for new or exchanged securities
or property in exchange for a Security, such as those acquired in a
merger or other transaction. If such exchanged securities or property
are nevertheless acquired by a Trust, at our instruction they will
either be sold or held in such Trust. In making the determination as to
whether to sell or hold the exchanged securities or property we may get
advice from the Portfolio Supervisor. Any proceeds received from the
sale of Securities, exchanged securities or property will be credited to
the Capital Account of a Trust for distribution to Unit holders or to
meet redemption requests. The Trustee may retain and pay us or an
affiliate of ours to act as agent for the Trusts to facilitate selling
Securities, exchanged securities or property from the Trusts. If we or
our affiliate act in this capacity, we will be held subject to the
restrictions under the Investment Company Act of 1940, as amended.
The Trustee may sell Securities designated by us, or, absent our
direction, at its own discretion, in order to meet redemption requests
or pay expenses. In designating Securities to be sold, we will try to
maintain the proportionate relationship among the Securities. If this is
not possible, the composition and diversification of a Trust may be
changed. To get the best price for a Trust we may specify minimum
amounts (generally 100 shares) in which blocks of Securities are to be
sold. We may consider sales of units of unit investment trusts which we
sponsor when we make recommendations to the Trustee as to which
broker/dealers they select to execute the Trusts' portfolio
transactions, or when acting as agent for the Trusts in acquiring or
selling Securities on behalf of the Trusts.
Amending or Terminating the Indenture
Amendments. The Indenture may be amended by us and the Trustee without
your consent:
- - To cure ambiguities;
- - To correct or supplement any defective or inconsistent provision;
- - To make any amendment required by any governmental agency; or
- - To make other changes determined not to be materially adverse to your
best interests (as determined by us and the Trustee).
Termination. As provided by the Indenture, each Trust will terminate on
the Mandatory Termination Date as stated in the "Summary of Essential
Information." The Trusts may be terminated earlier:
- - Upon the consent of 100% of the Unit holders of a Trust;
- - If the value of the Securities owned by such Trust as shown by any
evaluation is less than the lower of $2,000,000 or 20% of the total
value of Securities deposited in such Trust during the initial offering
period ("Discretionary Liquidation Amount"); or
- - In the event that Units of a Trust not yet sold aggregating more than
Page 47
60% of the Units of such Trust are tendered for redemption by
underwriters, including the Sponsor.
Prior to termination, the Trustee will send written notice to all Unit
holders which will specify how you should tender your certificates, if
any, to the Trustee. If a Trust is terminated due to this last reason,
we will refund your entire transactional sales charge; however,
termination of a Trust before the Mandatory Termination Date for any
other stated reason will result in all remaining unpaid deferred sales
charges on your Units being deducted from your termination proceeds. For
various reasons, including Unit holders' participation as Rollover Unit
holders, a Trust may be reduced below the Discretionary Liquidation
Amount and could therefore be terminated before the Mandatory
Termination Date.
Unless terminated earlier, the Trustee will begin to sell Securities in
connection with the termination of a Trust during the period beginning
nine business days prior to, and no later than, the Mandatory
Termination Date. We will determine the manner and timing of the sale of
Securities. Because the Trustee must sell the Securities within a
relatively short period of time, the sale of Securities as part of the
termination process may result in a lower sales price than might
otherwise be realized if such sale were not required at this time.
If you own at least 2,500 Units of The Dowsm(sm) DART 5 Portfolio, the
Target Small-Cap Portfolio or the Total Target Portfolio, or 5,000 Units
of the Target VIP Portfolio, the Target VIP Aggressive Equity Portfolio
or the Target VIP Conservative Equity Portfolio or such other amount as
required by your broker/dealer, the Trustee will send the registered
account holders a form at least 30 days prior to the Mandatory Termination
Date which will enable you to receive an In-Kind Distribution of Securities
(reduced by customary transfer and registration charges and subject to any
additional restrictions imposed on Fee Accounts Units by "wrap fee"
plans) rather than the typical cash distribution. See "Tax Status" and
"Redeeming Your Units" for additional information. You must notify the
Trustee at least ten business days prior to the Mandatory Termination
Date if you elect this In-Kind Distribution option. If you do not elect
to participate in either the Rollover Option or the In-Kind Distribution
option, you will receive a cash distribution from the sale of the
remaining Securities, along with your interest in the Income and Capital
Accounts, within a reasonable time after your Trust is terminated.
Regardless of the distribution involved, the Trustee will deduct from a
Trust any accrued costs, expenses, advances or indemnities provided for
by the Indenture, including estimated compensation of the Trustee and
costs of liquidation and any amounts required as a reserve to pay any
taxes or other governmental charges.
Information on the Sponsor, Trustee and Evaluator
The Sponsor.
We, Nike Securities L.P., specialize in the underwriting, trading and
wholesale distribution of unit investment trusts under the "First Trust"
brand name and other securities. An Illinois limited partnership formed
in 1991, we act as Sponsor for successive series of:
- - The First Trust Combined Series
- - FT Series (formerly known as The First Trust Special Situations Trust)
- - The First Trust Insured Corporate Trust
- - The First Trust of Insured Municipal Bonds
- - The First Trust GNMA
First Trust introduced the first insured unit investment trust in 1974.
To date we have deposited more than $40 billion in First Trust unit
investment trusts. Our employees include a team of professionals with
many years of experience in the unit investment trust industry.
We are a member of the National Association of Securities Dealers, Inc.
and Securities Investor Protection Corporation. Our principal offices
are at 1001 Warrenville Road, Lisle, Illinois 60532; telephone number
(630) 241-4141. As of December 31, 2001, the total partners' capital of
Nike Securities L.P. was $17,560,001 (audited).
This information refers only to us and not to the Trusts or to any
series of the Trusts or to any other dealer. We are including this
information only to inform you of our financial responsibility and our
ability to carry out our contractual obligations. We will provide more
detailed financial information on request.
Code of Ethics. The Sponsor and the Trusts have adopted a code of ethics
requiring the Sponsor's employees who have access to information on
Trust transactions to report personal securities transactions. The
purpose of the code is to avoid potential conflicts of interest and to
prevent fraud, deception or misconduct with respect to the Trusts.
The Trustee.
The Trustee is JPMorgan Chase Bank, with its principal executive office
located at 270 Park Avenue, New York, New York 10017 and its unit
Page 48
investment trust office at 4 New York Plaza, 6th Floor, New York, New
York, 10004-2413. If you have questions regarding the Trusts, you may
call the Customer Service Help Line at 1-800-682-7520. The Trustee is
supervised by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the
Federal Reserve System.
The Trustee has not participated in selecting the Securities; it only
provides administrative services.
Limitations of Liabilities of Sponsor and Trustee.
Neither we nor the Trustee will be liable for taking any action or for
not taking any action in good faith according to the Indenture. We will
also not be accountable for errors in judgment. We will only be liable
for our own willful misfeasance, bad faith, gross negligence (ordinary
negligence in the Trustee's case) or reckless disregard of our
obligations and duties. The Trustee is not liable for any loss or
depreciation when the Securities are sold. If we fail to act under the
Indenture, the Trustee may do so, and the Trustee will not be liable for
any action it takes in good faith under the Indenture.
The Trustee will not be liable for any taxes or other governmental
charges or interest on the Securities which the Trustee may be required
to pay under any present or future law of the United States or of any
other taxing authority with jurisdiction. Also, the Indenture states
other provisions regarding the liability of the Trustee.
If we do not perform any of our duties under the Indenture or are not
able to act or become bankrupt, or if our affairs are taken over by
public authorities, then the Trustee may:
- - Appoint a successor sponsor, paying them a reasonable rate not more
than that stated by the SEC;
- - Terminate the Indenture and liquidate the Trust; or
- - Continue to act as Trustee without terminating the Indenture.
The Evaluator.
The Evaluator is First Trust Advisors L.P., an Illinois limited
partnership formed in 1991 and an affiliate of the Sponsor. The
Evaluator's address is 1001 Warrenville Road, Lisle, Illinois 60532.
The Trustee, Sponsor and Unit holders may rely on the accuracy of any
evaluation prepared by the Evaluator. The Evaluator will make
determinations in good faith based upon the best available information,
but will not be liable to the Trustee, Sponsor or Unit holders for
errors in judgment.
Other Information
Legal Opinions.
Our counsel is Chapman and Cutler, 111 W. Monroe St., Chicago, Illinois,
60603. They have passed upon the legality of the Units offered hereby
and certain matters relating to federal tax law. Carter, Ledyard &
Milburn acts as the Trustee's counsel, as well as special New York tax
counsel for the Trusts.
Experts.
The Trusts' statements of net assets, including the schedules of
investments, as of the opening of business on the Initial Date of
Deposit included in this prospectus and elsewhere in the registration
statement have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein and elsewhere in
the registration statement, and are included in reliance upon the report
of such firm given upon their authority as experts in accounting and
auditing.
Supplemental Information.
If you write or call the Trustee, you will receive free of charge
supplemental information about this Series, which has been filed with
the SEC and to which we have referred throughout. This information
states more specific details concerning the nature, structure and risks
of this product.
The Nasdaq Stock Market, Inc.
The Nasdaq(R) Target 15 Portfolio, the Target VIP Portfolio and the
Total Target Portfolio are not sponsored, endorsed, sold or promoted by
The Nasdaq Stock Market, Inc. (including its affiliates) (Nasdaq, with
its affiliates, are referred to as the "Corporations"). The Corporations
have not passed on the legality or suitability of, or the accuracy or
adequacy of descriptions and disclosures relating to The Nasdaq(R)
Target 15 Portfolio, the Target VIP Portfolio or the Total Target
Portfolio. The Corporations make no representation or warranty, express
or implied, to the owners of Units of The Nasdaq(R) Target 15 Portfolio,
the Target VIP Portfolio or the Total Target Portfolio or any member of
the public regarding the advisability of investing in securities
generally or in The Nasdaq(R) Target 15 Portfolio, the Target VIP
Portfolio or the Total Target Portfolio particularly, or the ability of
the Nasdaq-100 Index(R) to track general stock market performance. The
Corporations' only relationship to the Sponsor ("Licensee") is in the
licensing of the Nasdaq 100(R), Nasdaq-100 Index(R) and Nasdaq(R)
trademarks or service marks, and certain trade names of the Corporations
and the use of the Nasdaq-100 Index(R) which is determined, composed and
Page 49
calculated by Nasdaq without regard to Licensee or The Nasdaq(R) Target
15 Portfolio, the Target VIP Portfolio or the Total Target Portfolio.
Nasdaq has no obligation to take the needs of the Licensee or the owners
of Units of The Nasdaq(R) Target 15 Portfolio, the Target VIP Portfolio
or the Total Target Portfolio into consideration in determining,
composing or calculating the Nasdaq-100 Index(R). The Corporations are
not responsible for and have not participated in the determination of
the timing of, prices at or quantities of The Nasdaq(R) Target 15
Portfolio, the Target VIP Portfolio or the Total Target Portfolio to be
issued or in the determination or calculation of the equation by which
The Nasdaq(R) Target 15 Portfolio, the Target VIP Portfolio and the
Total Target Portfolio are to be converted into cash. The Corporations
have no liability in connection with the administration, marketing or
trading of The Nasdaq(R) Target 15 Portfolio, the Target VIP Portfolio
or the Total Target Portfolio.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED
CALCULATION OF THE NASDAQ-100 INDEX(R) OR ANY DATA INCLUDED THEREIN. THE
CORPORATIONS MAKE NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY THE LICENSEE, OWNERS OF THE TARGET VIP PORTFOLIO OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE NASDAQ-100 INDEX(R) OR ANY
DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED
WARRANTIES AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE NASDAQ-100
INDEX(R) OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL THE CORPORATIONS HAVE ANY LIABILITY FOR ANY
LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL
DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
Page 50
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Page 51
First Trust(R)
The Dow(sm) Dividend And Repurchase Target 5 Portfolio,
2(nd) Quarter 2002 Series
European Target 20 Portfolio, 2(nd) Quarter 2002 Series
Global Target 15 Portfolio, 2(nd) Quarter 2002 Series
Target Small-Cap Portfolio, 2(nd) Quarter 2002 Series
Target VIP Portfolio, 2(nd) Quarter 2002 Series
Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
Target VIP Conservative Equity Portfolio,
2(nd) Quarter 2002 Series
Total Target Portfolio, 2(nd) Quarter 2002 Series
FT 611
Sponsor:
Nike Securities L.P.
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
1-630-241-4141
Trustee:
JPMorgan Chase Bank
4 New York Plaza, 6th floor
New York, New York 10004-2413
1-800-682-7520
24-Hour Pricing Line:
1-800-446-0132
________________________
When Units of the Trusts are no longer available, this prospectus may be
used as a preliminary prospectus for a future series, in which case you
should note the following:
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL, OR ACCEPT OFFERS TO BUY, SECURITIES OF A FUTURE SERIES
UNTIL THAT SERIES HAS BECOME EFFECTIVE WITH THE SECURITIES AND EXCHANGE
COMMISSION. NO SECURITIES CAN BE SOLD IN ANY STATE WHERE A SALE WOULD BE
ILLEGAL.
________________________
This prospectus contains information relating to the above-mentioned
unit investment trusts, but does not contain all of the information
about this investment company as filed with the Securities and Exchange
Commission in Washington, D.C. under the:
- - Securities Act of 1933 (file no. 333-82162) and
- - Investment Company Act of 1940 (file no. 811-05903)
Information about the Trusts, including their Codes of Ethics, can be
reviewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington D.C. Information regarding the operation of
the Commission's Public Reference Room may be obtained by calling the
Commission at 1-202-942-8090.
Information about the Trusts is available on the EDGAR Database on the
Commission's Internet site at
http://www.sec.gov.
To obtain copies at prescribed rates -
Write: Public Reference Section of the Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0102
e-mail address: publicinfo@sec.gov
March __, 2002
PLEASE RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE
Page 52
First Trust(R)
TARGET PORTFOLIO SERIES
The FT Series
Information Supplement
This Information Supplement provides additional information concerning
the structure, operations and risks of unit investment trusts ("Trusts")
contained in the Target Portfolio Series not found in the prospectus for
the Trusts. This Information Supplement is not a prospectus and does not
include all of the information that a prospective investor should
consider before investing in a Trust. This Information Supplement should
be read in conjunction with the prospectus for the Trust in which an
investor is considering investing.
This Information Supplement is dated March __, 2002. Capitalized terms
have been defined in the prospectus.
Table of Contents
Dow Jones & Company, Inc. 1
Standard & Poor's 2
The Nasdaq Stock Market, Inc. 2
Value Line Publishing, Inc. 2
Risk Factors
Securities 3
Small-Cap Companies 3
Dividends 3
REITs 3
Foreign Issuers 5
United Kingdom 6
Hong Kong 6
Exchange Rate 7
Litigation
Tobacco Industry 10
Concentration
Financial Services 10
Portfolios
Equity Securities Selected for The Dow(sm) DART 5 Portfolio, 2(nd) Quarter 2002 Series
Equity Securities Selected for the European Target 20 Portfolio, 2(nd) Quarter 2002 Series
Equity Securities Selected for the Global Target 15 Portfolio, 2(nd) Quarter 2002 Series
Equity Securities Selected for the Target Small-Cap Portfolio, 2(nd) Quarter 2002 Series
Equity Securities Selected for the Target VIP Portfolio, 2(nd) Quarter 2002 Series
Equity Securities Selected for the Target VIP Aggressive Equity Portfolio, 2(nd) Quarter 2002 Series
Equity Securities Selected for the Target VIP Conservative Equity Portfolio, 2(nd) Quarter 2002 Series
Equity Securities Selected for the Total Target Portfolio, 2(nd) Quarter 2002 Series
Dow Jones & Company, Inc.
The Trusts are not sponsored, endorsed, sold or promoted by Dow Jones &
Company, Inc. ("Dow Jones"). Dow Jones makes no representation or
warranty, express or implied, to the owners of the Trusts or any member
of the public regarding the advisability of investing in securities
generally or in the Trusts particularly. Dow Jones' only relationship to
the Sponsor is the licensing of certain trademarks, trade names and
service marks of Dow Jones and of the Dow Jones Industrial Average(sm),
which is determined, composed and calculated by Dow Jones without regard
to the Sponsor or the Trusts. Dow Jones has no obligation to take the
needs of the Sponsor or the owners of the Trusts into consideration in
determining, composing or calculating the Dow Jones Industrial
Average(sm). Dow Jones is not responsible for and has not participated
in the determination of the timing of, prices at, or quantities of the
Trusts to be issued or in the determination or calculation of the
equation by which the Trusts are to be converted into cash. Dow Jones
has no obligation or liability in connection with the administration,
marketing or trading of the Trusts.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN AND DOW
Page 1
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, OWNERS OF THE TRUSTS, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES INDUSTRIAL
AVERAGE(SM) OR ANY DATA INCLUDED THEREIN. DOW JONES MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT
TO THE DOW JONES INDUSTRIAL AVERAGE(SM) OR ANY DATA INCLUDED THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW JONES HAVE
ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR
CONSEQUENTIAL DAMAGES, EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
Standard & Poor's
The Trusts are not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes
no representation or warranty, express or implied, to the owners of the
Trusts or any member of the public regarding the advisability of
investing in securities generally or in the Trusts particularly or the
ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the licensee is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index, which is
determined, composed and calculated by S&P without regard to the
licensee or the Trusts. S&P has no obligation to take the needs of the
licensee or the owners of the Trusts into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for
and has not participated in the determination of the prices and amount
of the Trusts or the timing of the issuance or sale of the Trusts or in
the determination or calculation of the equation by which the Trusts are
to be converted into cash. S&P has no obligation or liability in
connection with the administration, marketing or trading of the Trusts.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY
FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE
LICENSEE, OWNERS OF THE TRUSTS, OR ANY OTHER PERSON OR ENTITY FROM THE
USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO
EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES,
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY
FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY THEREOF.
The Nasdaq Stock Market, Inc.
The "Nasdaq 100(R)," "Nasdaq-100 Index(R)," and "Nasdaq(R)" are trade or
service marks of The Nasdaq Stock Market, Inc. (which with its
affiliates are the "Corporations") and are licensed for use by us. The
Nasdaq(R) Target 15 Portfolio, the Target VIP Portfolio and the Total
Target Portfolio have not been passed on by the Corporations as to its
legality or suitability. The Nasdaq(R) Target 15 Portfolio, the Target
VIP Portfolio and the Total Target Portfolio are not issued, endorsed,
sold, or promoted by the Corporations. The Corporations make no
warranties and bear no liability with respect to The Nasdaq(R) Target 15
Portfolio, the Target VIP Portfolio and the Total Target Portfolio.
Value Line Publishing, Inc.
Value Line Publishing, Inc.'s ("VLPI") only relationship to Nike is
VLPI's licensing to Nike of certain VLPI trademarks and trade names and
the Value Line(R) Timeliness(TM) Ranking System (the "System"), which is
composed by VLPI without regard to Nike, this Product or any investor.
VLPI has no obligation to take the needs of Nike or any investor in the
Product into consideration in composing the System. The Product results
may differ from the hypothetical or published results of the Value
Line(R) Timeliness(TM) Ranking System. VLPI is not responsible for and
has not participated in the determination of the prices and composition
of the Product or the timing of the issuance for sale of the Product or
in the calculation of the equations by which the Product is to be
converted into cash.
VLPI MAKES NO WARRANTY CONCERNING THE SYSTEM, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR ANY IMPLIED WARRANTIES ARISING
Page 2
FROM USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE, AND
VLPI MAKES NO WARRANTY AS TO THE POTENTIAL PROFITS OR ANY OTHER BENEFITS
THAT MAY BE ACHIEVED BY USING THE SYSTEM OR ANY INFORMATION OR MATERIALS
GENERATED THEREFROM. VLPI DOES NOT WARRANT THAT THE SYSTEM WILL MEET ANY
REQUIREMENTS OR THAT IT WILL BE ACCURATE OR ERROR-FREE. VLPI ALSO DOES
NOT GUARANTEE ANY USES, INFORMATION, DATA OR OTHER RESULTS GENERATED
FROM THE SYSTEM. VLPI HAS NO OBLIGATION OR LIABILITY (I) IN CONNECTION
WITH THE ADMINISTRATION, MARKETING OR TRADING OF THE PRODUCT; OR (II)
FOR ANY LOSS, DAMAGE, COST OR EXPENSE SUFFERED OR INCURRED BY ANY
INVESTOR OR OTHER PERSON OR ENTITY IN CONNECTION WITH THIS PRODUCT, AND
IN NO EVENT SHALL VLPI BE LIABLE FOR ANY LOST PROFITS OR OTHER
CONSEQUENTIAL, SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT OR EXEMPLARY
DAMAGES IN CONNECTION WITH THE PRODUCT.
Risk Factors
Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the
risk that the financial condition of the issuers of the Securities or
the general condition of the relevant stock market may worsen, and the
value of the Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as
market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors, including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. Both U.S. and foreign
markets have experienced substantial volatility and significant declines
recently as a result of certain or all of these factors.
Small-Cap Companies. While historically small-cap company stocks have
outperformed the stocks of large companies, the former have customarily
involved more investment risk as well. Small-cap companies may have
limited product lines, markets or financial resources; may lack
management depth or experience; and may be more vulnerable to adverse
general market or economic developments than large companies. Some of
these companies may distribute, sell or produce products which have
recently been brought to market and may be dependent on key personnel.
The prices of small company securities are often more volatile than
prices associated with large company issues, and can display abrupt or
erratic movements at times, due to limited trading volumes and less
publicly available information. Also, because small cap companies
normally have fewer shares outstanding and these shares trade less
frequently than large companies, it may be more difficult for the Trusts
which contain these Securities to buy and sell significant amounts of
such shares without an unfavorable impact on prevailing market prices.
Dividends. Shareholders of common stocks have rights to receive payments
from the issuers of those common stocks that are generally subordinate
to those of creditors of, or holders of debt obligations or preferred
stocks of, such issuers. Shareholders of common stocks of the type held
by the Trusts have a right to receive dividends only when and if, and in
the amounts, declared by the issuer's board of directors and have a
right to participate in amounts available for distribution by the issuer
only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims
for payment of principal, interest and dividends which could adversely
affect the ability and inclination of the issuer to declare or pay
dividends on its common stock or the rights of holders of common stock
with respect to assets of the issuer upon liquidation or bankruptcy.
Cumulative preferred stock dividends must be paid before common stock
dividends, and any cumulative preferred stock dividend omitted is added
to future dividends payable to the holders of cumulative preferred
stock. Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.
REITs. An investment in the Global Target 15 Portfolio should be made
with an understanding of risks inherent in an investment in REITs
specifically and real estate generally (in addition to securities market
risks). Generally, these include economic recession, the cyclical nature
of real estate markets, competitive overbuilding, unusually adverse
weather conditions, changing demographics, changes in governmental
regulations (including tax laws and environmental, building, zoning and
sales regulations), increases in real estate taxes or costs of material
and labor, the inability to secure performance guarantees or insurance
as required, the unavailability of investment capital and the inability
to obtain construction financing or mortgage loans at rates acceptable
to builders and purchasers of real estate. Additional risks include an
inability to reduce expenditures associated with a property (such as
Page 3
mortgage payments and property taxes) when rental revenue declines, and
possible loss upon foreclosure of mortgaged properties if mortgage
payments are not paid when due.
REITs are financial vehicles that have as their objective the pooling of
capital from a number of investors in order to participate directly in
real estate ownership or financing. REITs are generally fully integrated
operating companies that have interests in income-producing real estate.
Equity REITs emphasize direct property investment, holding their
invested assets primarily in the ownership of real estate or other
equity interests. REITs obtain capital funds for investment in
underlying real estate assets by selling debt or equity securities in
the public or institutional capital markets or by bank borrowing. Thus,
the returns on common equities of the REITs in which the Trust invests
will be significantly affected by changes in costs of capital and,
particularly in the case of highly "leveraged" REITs (i.e., those with
large amounts of borrowings outstanding), by changes in the level of
interest rates. The objective of an equity REIT is to purchase income-
producing real estate properties in order to generate high levels of
cash flow from rental income and a gradual asset appreciation, and they
typically invest in properties such as office, retail, industrial, hotel
and apartment buildings and healthcare facilities.
REITs are a creation of the tax law. REITs essentially operate as a
corporation or business trust with the advantage of exemption from
corporate income taxes provided the REIT satisfies the requirements of
Sections 856 through 860 of the Internal Revenue Code. The major tests
for tax-qualified status are that the REIT (i) be managed by one or more
trustees or directors, (ii) issue shares of transferable interest to its
owners, (iii) have at least 100 shareholders, (iv) have no more than 50%
of the shares held by five or fewer individuals, (v) invest
substantially all of its capital in real estate related assets and
derive substantially all of its gross income from real estate related
assets and (vi) distributed at least 95% of its taxable income to its
shareholders each year. If any REIT in the Trust's portfolio should fail
to qualify for such tax status, the related shareholders (including the
Trust) could be adversely affected by the resulting tax consequences.
The underlying value of the Securities and the Trust's ability to make
distributions to Unit holders may be adversely affected by changes in
national economic conditions, changes in local market conditions due to
changes in general or local economic conditions and neighborhood
characteristics, increased competition from other properties,
obsolescence of property, changes in the availability, cost and terms of
mortgage funds, the impact of present or future environmental
legislation and compliance with environmental laws, the ongoing need for
capital improvements, particularly in older properties, changes in real
estate tax rates and other operating expenses, regulatory and economic
impediments to raising rents, adverse changes in governmental rules and
fiscal policies, dependency on management skill, civil unrest, acts of
God, including earthquakes and other natural disasters (which may result
in uninsured losses), acts of war, adverse changes in zoning laws, and
other factors which are beyond the control of the issuers of the REITs
in a Trust. The value of the REITs may at times be particularly
sensitive to devaluation in the event of rising interest rates.
REITs may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential
complexes and office buildings. The impact of economic conditions on
REITs can also be expected to vary with geographic location and property
type. Investors should be aware the REITs may not be diversified and are
subject to the risks of financing projects. REITs are also subject to
defaults by borrowers, self-liquidation, the market's perception of the
REIT industry generally, and the possibility of failing to qualify for
pass-through of income under the Internal Revenue Code, and to maintain
exemption from the Investment Company Act of 1940. A default by a
borrower or lessee may cause the REIT to experience delays in enforcing
its right as mortgagee or lessor and to incur significant costs related
to protecting its investments. In addition, because real estate
generally is subject to real property taxes, the REITs in the Trust may
be adversely affected by increases or decreases in property tax rates
and assessments or reassessments of the properties underlying the REITs
by taxing authorities. Furthermore, because real estate is relatively
illiquid, the ability of REITs to vary their portfolios in response to
changes in economic and other conditions may be limited and may
adversely affect the value of the Units. There can be no assurance that
any REIT will be able to dispose of its underlying real estate assets
when advantageous or necessary.
The issuer of REITs generally maintains comprehensive insurance on
presently owned and subsequently acquired real property assets,
including liability, fire and extended coverage. However, certain types
of losses may be uninsurable or not be economically insurable as to
which the underlying properties are at risk in their particular locales.
There can be no assurance that insurance coverage will be sufficient to
pay the full current market value or current replacement cost of any
lost investment. Various factors might make it impracticable to use
insurance proceeds to replace a facility after it has been damaged or
destroyed. Under such circumstances, the insurance proceeds received by
Page 4
a REIT might not be adequate to restore its economic position with
respect to such property.
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in such
property. Such laws often impose liability whether or not the owner or
operator caused or knew of the presence of such hazardous or toxic
substances and whether or not the storage of such substances was in
violation of a tenant's lease. In addition, the presence of hazardous or
toxic substances, or the failure to remediate such property properly,
may adversely affect the owner's ability to borrow using such real
property as collateral. No assurance can be given that one or more of
the REITs in a Trust may not be presently liable or potentially liable
for any such costs in connection with real estate assets they presently
own or subsequently acquire while such REITs are held in a Trust.
Recently, in the wake of Chinese economic development and reform,
certain Hong Kong real estate companies and other investors began
purchasing and developing real estate in southern China, including
Beijing, the Chinese capital. By 1992, however, southern China began to
experience a rise in real estate prices, increases in construction costs
and a tightening of credit markets. Any worsening of these conditions
could affect the profitability and financial condition of Hong Kong real
estate companies and could have a materially adverse effect on the value
of a Global Target 15 Portfolio.
Foreign Issuers. Since all of the Securities included in the European
Target 20 Portfolio and a portion of the Securities in the Global Target
15 Portfolio, the Target VIP Portfolio, the Target VIP Aggressive Equity
Portfolio and the Target VIP Conservative Equity Portfolio consist of
securities of foreign issuers, an investment in these Trusts involves
certain investment risks that are different in some respects from an
investment in a trust which invests entirely in the securities of
domestic issuers. These investment risks include future political or
governmental restrictions which might adversely affect the payment or
receipt of payment of dividends on the relevant Securities, the
possibility that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the
relevant stock market may worsen (both of which would contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units), the limited liquidity and relatively small market
capitalization of the relevant securities market, expropriation or
confiscatory taxation, economic uncertainties and foreign currency
devaluations and fluctuations. In addition, for foreign issuers that are
not subject to the reporting requirements of the Securities Exchange Act
of 1934, there may be less publicly available information than is
available from a domestic issuer. Also, foreign issuers are not
necessarily subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those
applicable to domestic issuers. The securities of many foreign issuers
are less liquid and their prices more volatile than securities of
comparable domestic issuers. In addition, fixed brokerage commissions
and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers
in foreign countries than there is in the United States. However, due to
the nature of the issuers of the Securities selected for the Trusts, the
Sponsor believes that adequate information will be available to allow
the Supervisor to provide portfolio surveillance for such Trusts.
Securities issued by non-U.S. issuers generally pay dividends in foreign
currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the United States dollar value of these securities
will vary with fluctuations in the U.S. dollar foreign exchange rates
for the various Securities. See "Exchange Rate" below.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities in the Trusts are subject to
exchange control restrictions under existing law which would materially
interfere with payment to such Trusts of dividends due on, or proceeds
from the sale of, the Securities. However, there can be no assurance
that exchange control regulations might not be adopted in the future
which might adversely affect payment to such Trusts. The adoption of
exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the
Trusts and on the ability of such Trusts to satisfy their obligation to
redeem Units tendered to the Trustee for redemption. In addition,
restrictions on the settlement of transactions on either the purchase or
sale side, or both, could cause delays or increase the costs associated
with the purchase and sale of the foreign Securities and correspondingly
could affect the price of the Units.
Investors should be aware that it may not be possible to buy all
Securities at the same time because of the unavailability of any
Security, and restrictions applicable to a Trust relating to the
purchase of a Security by reason of the federal securities laws or
otherwise.
Foreign securities generally have not been registered under the
Securities Act of 1933 and may not be exempt from the registration
requirements of such Act. Sales of non-exempt Securities by a Trust in
the United States securities markets are subject to severe restrictions
and may not be practicable. Accordingly, sales of these Securities by a
Page 5
Trust will generally be effected only in foreign securities markets.
Although the Sponsor does not believe that the Trusts will encounter
obstacles in disposing of the Securities, investors should realize that
the Securities may be traded in foreign countries where the securities
markets are not as developed or efficient and may not be as liquid as
those in the United States. The value of the Securities will be
adversely affected if trading markets for the Securities are limited or
absent.
United Kingdom. The emphasis of the United Kingdom's economy is in the
private services sector, which includes the wholesale and retail sector,
banking, finance, insurance and tourism. Services as a whole account for
a majority of the United Kingdom's gross national product and makes a
significant contribution to the country's balance of payments. The
portfolios of the Trusts may contain common stocks of British companies
engaged in such industries as banking, chemicals, building and
construction, transportation, telecommunications and insurance. Many of
these industries may be subject to government regulation, which may have
a materially adverse effect on the performance of their stock. In the
first quarter of 1998, gross domestic product (GDP) of the United
Kingdom grew to a level 3.0% higher than in the first quarter of 1997,
however the overall rate of GDP growth has slowed since the third
quarter of 1997. The slow down largely reflects a deteriorating trade
position and higher indirect taxes. The average quarterly rate of GDP
growth in the United Kingdom (as well as in Europe generally) has been
decelerating since 1994. The United Kingdom is a member of the European
Union (the "EU") which was created through the formation of the
Maastricht Treaty on European Union in late 1993. It is expected that
the Treaty will have the effect of eliminating most remaining trade
barriers between the 15 member nations and make Europe one of the
largest common markets in the world. However, the effective
implementation of the Treaty provisions and the rate at which trade
barriers are eliminated is uncertain at this time. Furthermore, the
recent rapid political and social change throughout Europe make the
extent and nature of future economic development in the United Kingdom
and Europe and the impact of such development upon the value of
Securities issued by United Kingdom companies impossible to predict.
A majority of the EU members converted their existing sovereign
currencies to a common currency (the "euro") on January 1, 1999. The
United Kingdom did not participate in this conversion on January 1, 1999
and the Sponsor is unable to predict if or when the United Kingdom will
convert to the euro. Moreover, it is not possible to accurately predict
the effect of the current political and economic situation upon long-
term inflation and balance of trade cycles and how these changes, as
well as the implementation of a common currency throughout a majority of
EU countries, would affect the currency exchange rate between the U.S.
dollar and the British pound sterling. In addition, United Kingdom
companies with significant markets or operations in other European
countries (whether or not such countries are participating) face
strategic challenges as these entities adapt to a single trans-national
currency. The euro conversion may have a material impact on revenues,
expenses or income from operations; increase competition due to the
increased price transparency of EU markets; affect issuers' currency
exchange rate risk and derivatives exposure; disrupt current contracts;
cause issuers to increase spending on information technology updates
required for the conversion; and result in potential adverse tax
consequences. The Sponsor is unable to predict what impact, if any, the
euro conversion will have on any of the Securities issued by United
Kingdom companies in the Trusts.
Hong Kong. Hong Kong, established as a British colony in the 1840's,
reverted to Chinese sovereignty effective July 1, 1997. On such date,
Hong Kong became a Special Administrative Region ("SAR") of China. Hong
Kong's new constitution is the Basic Law (promulgated by China in 1990).
Prior to July 1, 1997, the Hong Kong government followed a laissez-faire
policy toward industry. There were no major import, export or foreign
exchange restrictions. Regulation of business was generally minimal with
certain exceptions, including regulated entry into certain sectors of
the economy and a fixed exchange rate regime by which the Hong Kong
dollar has been pegged to the U.S. dollar. Over the past two decades
through 1996, the gross domestic product (GDP) has tripled in real
terms, equivalent to an average annual growth rate of 6%. However, Hong
Kong's recent economic data has not been encouraging. The full impact of
the Asian financial crisis, as well as current international economic
instability, is likely to continue to have a negative impact on the Hong
Kong economy in the near future.
Although China has committed by treaty to preserve for 50 years the
economic and social freedoms enjoyed in Hong Kong prior to the
reversion, the continuation of the economic system in Hong Kong after
the reversion will be dependent on the Chinese government, and there can
be no assurances that the commitment made by China regarding Hong Kong
will be maintained. Prior to the reversion, legislation was enacted in
Hong Kong designed to extend democratic voting procedures for Hong
Kong's legislature. China has expressed disagreement with this
legislation, which it states is in contravention of the principles
evidenced in the Basic Law of the Hong Kong SAR. The National Peoples'
Congress of China has passed a resolution to the effect that the
Legislative Council and certain other councils and boards of the Hong
Page 6
Kong Government were to be terminated on June 30, 1997. Such bodies have
subsequently been reconstituted in accordance with China's
interpretation of the Basic Law. Any increase in uncertainty as to the
future economic and political status of Hong Kong could have a
materially adverse effect on the value of the Global Target 15
Portfolio. The Sponsor is unable to predict the level of market
liquidity or volatility which may occur as a result of the reversion to
sovereignty, both of which may negatively impact such Trust and the
value of the Units.
The currency crisis which has affected a majority of Asian markets since
mid-1997 has forced Hong Kong leaders to address whether to devalue the
Hong Kong dollar or maintain its peg to the U.S. dollar. During the
volatile markets of 1998, the Hong Kong Monetary Authority (the "HKMA")
acquired the common stock of certain Hong Kong issuers listed on the
Hong Kong Stock Exchange in an effort to stabilize the Hong Kong dollar
and thwart currency speculators. Government intervention may hurt Hong
Kong's reputation as a free market and increases concerns that
authorities are not willing to let Hong Kong's currency system function
autonomously. This may undermine confidence in the Hong Kong dollar's
peg to the U.S. dollar. Any downturn in economic growth or increase in
the rate of inflation in China or Hong Kong could have a materially
adverse effect on the value of the Global Target 15 Portfolio.
Securities prices on the Hong Kong Stock Exchange, and specifically the
Hang Seng Index, can be highly volatile and are sensitive to
developments in Hong Kong and China, as well as other world markets. For
example, the Hang Seng Index declined by approximately 31% in October,
1997 as a result of speculation that the Hong Kong dollar would become
the next victim of the Asian currency crisis, and in 1989, the Hang Seng
Index dropped 1,216 points (approximately 58%) in early June following
the events at Tiananmen Square. The Hang Seng Index gradually climbed
subsequent to the events at Tiananmen Square, but fell by 181 points on
October 13, 1989 (approximately 6.5%) following a substantial fall in
the U.S. stock markets. During 1994, the Hang Seng Index lost
approximately 31% of its value. From January through August of 1998,
during a period marked by international economic instability and a
global currency crisis, the Hang Seng Index declined by nearly 27%. The
Hang Seng Index is subject to change and delisting of any issues may
have an adverse impact on the performance of the Global Target 15
Portfolio, although delisting would not necessarily result in the
disposal of the stock of these companies, nor would it prevent such
Trust from purchasing additional Securities. In recent years, a number
of companies, comprising approximately 10% of the total capitalization
of the Hang Seng Index, have delisted. In addition, as a result of Hong
Kong's reversion to Chinese sovereignty, an increased number of Chinese
companies could become listed on the Hong Kong Stock Exchange, thereby
changing the composition of the stock market and, potentially, the
composition of the Hang Seng Index.
Exchange Rate. The European Target 20 Portfolio and the Global Target 15
Portfolio are comprised either totally or substantially of Securities
that are principally traded in foreign currencies and as such, involve
investment risks that are substantially different from an investment in
a fund which invests in securities that are principally traded in United
States dollars. The United States dollar value of the portfolio (and
hence of the Units) and of the distributions from the portfolio will
vary with fluctuations in the United States dollar foreign exchange
rates for the relevant currencies. Most foreign currencies have
fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the
rate of inflation in the respective economies compared to the United
States, the impact of interest rate differentials between different
currencies on the movement of foreign currency rates, the balance of
imports and exports goods and services, the soundness of the world
economy and the strength of the respective economy as compared to the
economies of the United States and other countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty which established a system of
fixed exchange rates and the convertibility of the United States dollar
into gold through foreign central banks. Starting in 1971, growing
volatility in the foreign exchange markets caused the United States to
abandon gold convertibility and to effect a small devaluation of the
United States dollar. In 1973, the system of fixed exchange rates
between a number of the most important industrial countries of the
world, among them the United States and most Western European countries,
was completely abandoned. Subsequently, major industrialized countries
have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have
continued to "peg" their currencies to the United States dollar although
there has been some interest in recent years in "pegging" currencies to
"baskets" of other currencies or to a Special Drawing Right administered
by the International Monetary Fund. In Europe, the euro has been
developed. Currencies are generally traded by leading international
commercial banks and institutional investors (including corporate
treasurers, money managers, pension funds and insurance companies). From
time to time, central banks in a number of countries also are major
buyers and sellers of foreign currencies, mostly for the purpose of
preventing or reducing substantial exchange rate fluctuations.
Page 7
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well-particularly with respect to
transfers of capital). Investor psychology may also be an important
determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end-of-month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling and the Hong Kong dollar:
Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies
United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
_____ __________ ___________
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
1996 0.583-0.670 7.732-7.742
1997 0.584-0.633 7.708-7.751
1998 0.584-0.620 7.735-7.749
1999 0.597-0.646 7.746-7.775
2000 0.605-0.715 7.774-7.800
2001 0.678-0.707 7.798-7.800
Source: Bloomberg L.P.
Page 8
End of Month Exchange Rates End of Month Exchange Rates
for Foreign Currencies for Foreign Currencies (continued)
United Kingdom United Kingdom
Pound Sterling/ Hong Kong/ Euro/U.S. Pound Sterling/ Hong Kong/ Euro/U.S.
Monthly Period U.S. Dollar U.S.Dollar Dollar Monthly Period U.S. Dollar U.S.Dollar Dollar
________ __________ ______ ______ __________ ________ ______ ______
1995: 1999:
January .633 7.732 N.A. January .608 7.748 .880
February .631 7.730 N.A. February .624 7.748 .907
March .617 7.733 N.A. March .621 7.750 .929
April .620 7.742 N.A. April .621 7.750 .946
May .630 7.735 N.A. May .624 7.755 .960
June .627 7.736 N.A. June .634 7.758 .966
July .626 7.738 N.A. July .617 7.762 .934
August .645 7.741 N.A. August .623 7.765 .947
September .631 7.732 N.A. September .607 7.768 .936
October .633 7.727 N.A. October .608 7.768 .948
November .652 7.731 N.A. November .626 7.767 .991
December .645 7.733 N.A. December .618 7.774 .994
1996: 2000:
January .661 7.728 N.A. January .619 7.780 1.030
February .653 7.731 N.A. February .633 7.783 1.037
March .655 7.734 N.A. March .628 7.787 1.047
April .664 7.735 N.A. April .645 7.789 1.096
May .645 7.736 N.A. May .666 7.792 1.066
June .644 7.741 N.A. June .661 7.796 1.050
July .642 7.735 N.A. July .667 7.799 1.079
August .639 7.733 N.A. August .691 7.799 1.126
September .639 7.733 N.A. September .678 7.796 1.132
October .615 7.732 N.A. October .698 7.797 1.178
November .595 7.732 N.A. November .702 7.799 1.145
December .583 7.735 N.A. December .670 7.800 1.060
1997: 2001:
January .624 7.750 N.A. January .683 7.799 1.067
February .614 7.744 N.A. February .692 7.800 1.082
March .611 7.749 N.A. March .706 7.800 1.140
April .616 7.746 N.A. April .699 7.799 1.127
May .610 7.748 N.A. May .705 7.800 1.182
June .600 7.747 N.A. June .707 7.800 1.178
July .609 7.742 N.A. July .702 7.800 1.141
August .622 7.750 N.A. August .688 7.800 1.096
September .619 7.738 N.A. September .678 7.800 1.097
October .598 7.731 N.A. October .688 7.800 1.110
November .592 7.730 N.A. November .702 7.800 1.116
December .607 7.749 N.A. December .687 7.798 1.124
1998: 2002:
January .613 7.735 N.A. January .709 7.7992 1.164
February .609 7.743 N.A. February .706 7.7994 1.150
March .598 7.749 N.A. March 27
April .598 7.747 N.A.
May .613 7.749 N.A.
June .600 7.748 N.A.
July .613 7.748 N.A.
August .595 7.749 N.A.
September .589 7.749 N.A.
October .596 7.747 N.A.
November .607 7.743 N.A.
December .602 7.746 N.A.
Source: Bloomberg L.P.
Page 9
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by the Evaluator
may not be indicative of the amount in United States dollars the Trusts
would receive had the Trustee sold any particular currency in the
market. The foreign exchange transactions of the Trusts will be
conducted by the Trustee with foreign exchange dealers acting as
principals on a spot (i.e., cash) buying basis. Although foreign
exchange dealers trade on a net basis, they do realize a profit based
upon the difference between the price at which they are willing to buy a
particular currency (bid price) and the price at which they are willing
to sell the currency (offer price).
Litigation
Tobacco Industry. Certain of the issuers of Securities in certain Trusts
may be involved in the manufacture, distribution and sale of tobacco
products. Pending litigation proceedings against such issuers in the
United States and abroad cover a wide range of matters including product
liability and consumer protection. Damages claimed in such litigation
alleging personal injury (both individual and class actions), and in
health cost recovery cases brought by governments, labor unions and
similar entities seeking reimbursement for health care expenditures,
aggregate many billions of dollars.
In November 1998, certain companies in the U.S. tobacco industry entered
into a negotiated settlement with several states which would result in
the resolution of significant litigation and regulatory issues affecting
the tobacco industry generally. The proposed settlement, while extremely
costly to the tobacco industry, would significantly reduce uncertainties
facing the industry and increase stability in business and capital
markets. Future litigation and/or legislation could adversely affect the
value, operating revenues and financial position of tobacco companies.
The Sponsor is unable to predict the outcome of litigation pending
against tobacco companies or how the current uncertainty concerning
regulatory and legislative measures will ultimately be resolved. These
and other possible developments may have a significant impact upon both
the price of such Securities and the value of Units of Trusts containing
such Securities.
Concentration
Financial Services. An investment in Units of the European Target 20
Portfolio should be made with an understanding of the problems and risks
inherent in the bank and financial services sector in general.
Banks, thrifts and their holding companies are especially subject to the
adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in
their fields of business. Banks and thrifts are highly dependent on net
interest margin. Recently, bank profits have come under pressure as net
interest margins have contracted, but volume gains have been strong in
both commercial and consumer products. There is no certainty that such
conditions will continue. Bank and thrift institutions had received
significant consumer mortgage fee income as a result of activity in
mortgage and refinance markets. As initial home purchasing and
refinancing activity subsided, this income diminished. Economic
conditions in the real estate markets, which have been weak in the past,
can have a substantial effect upon banks and thrifts because they
generally have a portion of their assets invested in loans secured by
real estate. Banks, thrifts and their holding companies are subject to
extensive federal regulation and, when such institutions are state-
chartered, to state regulation as well. Such regulations impose strict
capital requirements and limitations on the nature and extent of
business activities that banks and thrifts may pursue. Furthermore, bank
regulators have a wide range of discretion in connection with their
supervisory and enforcement authority and may substantially restrict the
permissible activities of a particular institution if deemed to pose
significant risks to the soundness of such institution or the safety of
the federal deposit insurance fund. Regulatory actions, such as
increases in the minimum capital requirements applicable to banks and
thrifts and increases in deposit insurance premiums required to be paid
by banks and thrifts to the Federal Deposit Insurance Corporation
("FDIC"), can negatively impact earnings and the ability of a company to
pay dividends. Neither federal insurance of deposits nor governmental
regulations, however, insures the solvency or profitability of banks or
their holding companies, or insures against any risk of investment in
the securities issued by such institutions.
The statutory requirements applicable to and regulatory supervision of
banks, thrifts and their holding companies have increased significantly
and have undergone substantial change in recent years. To a great
extent, these changes are embodied in the Financial Institutions Reform,
Recovery and Enforcement Act; enacted in August 1989, the Federal
Page 10
Deposit Insurance Corporation Improvement Act of 1991, the Resolution
Trust Corporation Refinancing, Restructuring, and Improvement Act of
1991 and the regulations promulgated under these laws. Many of the
regulations promulgated pursuant to these laws have only recently been
finalized and their impact on the business, financial condition and
prospects of the Securities in a Trust's portfolio cannot be predicted
with certainty. The recently enacted Gramm-Leach-Bliley Act repealed
most of the barriers set up by the 1933 Glass-Steagall Act which
separated the banking, insurance and securities industries. Now banks,
insurance companies and securities firms can merge to form one-stop
financial conglomerates marketing a wide range of financial service
products to investors. This legislation will likely result in increased
merger activity and heightened competition among existing and new
participants in the field. Efforts to expand the ability of federal
thrifts to branch on an interstate basis have been initially successful
through promulgation of regulations, and legislation to liberalize
interstate banking has recently been signed into law. Under the
legislation, banks will be able to purchase or establish subsidiary
banks in any state, one year after the legislation's enactment. Since
mid-1997, banks have been allowed to turn existing banks into branches.
Consolidation is likely to continue. The Securities and Exchange
Commission and the Financial Accounting Standards Board require the
expanded use of market value accounting by banks and have imposed rules
requiring market accounting for investment securities held in trading
accounts or available for sale. Adoption of additional such rules may
result in increased volatility in the reported health of the industry,
and mandated regulatory intervention to correct such problems.
Additional legislative and regulatory changes may be forthcoming. For
example, the bank regulatory authorities have proposed substantial
changes to the Community Reinvestment Act and fair lending laws, rules
and regulations, and there can be no certainty as to the effect, if any,
that such changes would have on the Securities in a Trust's portfolio.
In addition, from time to time the deposit insurance system is reviewed
by Congress and federal regulators, and proposed reforms of that system
could, among other things, further restrict the ways in which deposited
moneys can be used by banks or reduce the dollar amount or number of
deposits insured for any depositor. Such reforms could reduce
profitability as investment opportunities available to bank institutions
become more limited and as consumers look for savings vehicles other
than bank deposits. Banks and thrifts face significant competition from
other financial institutions such as mutual funds, credit unions,
mortgage banking companies and insurance companies, and increased
competition may result from legislative broadening of regional and
national interstate banking powers as has been recently enacted. Among
other benefits, the legislation allows banks and bank holding companies
to acquire across previously prohibited state lines and to consolidate
their various bank subsidiaries into one unit. The Sponsor makes no
prediction as to what, if any, manner of bank and thrift regulatory
actions might ultimately be adopted or what ultimate effect such actions
might have on a Trust's portfolio.
The Federal Bank Holding Company Act of 1956 generally prohibits a bank
holding company from (1) acquiring, directly or indirectly, more than 5%
of the outstanding shares of any class of voting securities of a bank or
bank holding company, (2) acquiring control of a bank or another bank
holding company, (3) acquiring all or substantially all the assets of a
bank, or (4) merging or consolidating with another bank holding company,
without first obtaining Federal Reserve Board ("FRB") approval. In
considering an application with respect to any such transaction, the FRB
is required to consider a variety of factors, including the potential
anti-competitive effects of the transaction, the financial condition and
future prospects of the combining and resulting institutions, the
managerial resources of the resulting institution, the convenience and
needs of the communities the combined organization would serve, the
record of performance of each combining organization under the Community
Reinvestment Act and the Equal Credit Opportunity Act, and the
prospective availability to the FRB of information appropriate to
determine ongoing regulatory compliance with applicable banking laws. In
addition, the federal Change In Bank Control Act and various state laws
impose limitations on the ability of one or more individuals or other
entities to acquire control of banks or bank holding companies.
The FRB has issued a policy statement on the payment of cash dividends
by bank holding companies. In the policy statement, the FRB expressed
its view that a bank holding company experiencing earnings weaknesses
should not pay cash dividends which exceed its net income or which could
only be funded in ways that would weaken its financial health, such as
by borrowing. The FRB also may impose limitations on the payment of
dividends as a condition to its approval of certain applications,
including applications for approval of mergers and acquisitions. The
Sponsor makes no prediction as to the effect, if any, such laws will
have on the Securities or whether such approvals, if necessary, will be
obtained.
Companies involved in the insurance industry are engaged in
underwriting, reinsuring, selling, distributing or placing of property
and casualty, life or health insurance. Other growth areas within the
insurance industry include brokerage, reciprocals, claims processors and
multiline insurance companies. Insurance company profits are affected by
interest rate levels, general economic conditions, and price and
marketing competition. Property and casualty insurance profits may also
Page 11
be affected by weather catastrophes and other disasters. Life and health
insurance profits may be affected by mortality and morbidity rates.
Individual companies may be exposed to material risks including reserve
inadequacy and the inability to collect from reinsurance carriers.
Insurance companies are subject to extensive governmental regulation,
including the imposition of maximum rate levels, which may not be
adequate for some lines of business. Proposed or potential tax law
changes may also adversely affect insurance companies' policy sales, tax
obligations, and profitability. In addition to the foregoing, profit
margins of these companies continue to shrink due to the commoditization
of traditional businesses, new competitors, capital expenditures on new
technology and the pressures to compete globally.
In addition to the normal risks of business, companies involved in the
insurance industry are subject to significant risk factors, including
those applicable to regulated insurance companies, such as: (i) the
inherent uncertainty in the process of establishing property-liability
loss reserves, particularly reserves for the cost of environmental,
asbestos and mass tort claims, and the fact that ultimate losses could
materially exceed established loss reserves which could have a material
adverse effect on results of operations and financial condition; (ii)
the fact that insurance companies have experienced, and can be expected
in the future to experience, catastrophe losses which could have a
material adverse impact on their financial condition, results of
operations and cash flow; (iii) the inherent uncertainty in the process
of establishing property-liability loss reserves due to changes in loss
payment patterns caused by new claims settlement practices; (iv) the
need for insurance companies and their subsidiaries to maintain
appropriate levels of statutory capital and surplus, particularly in
light of continuing scrutiny by rating organizations and state insurance
regulatory authorities, and in order to maintain acceptable financial
strength or claims-paying ability rating; (v) the extensive regulation
and supervision to which insurance companies' subsidiaries are subject,
various regulatory initiatives that may affect insurance companies, and
regulatory and other legal actions; (vi) the adverse impact that
increases in interest rates could have on the value of an insurance
company's investment portfolio and on the attractiveness of certain of
its products; (vii) the need to adjust the effective duration of the
assets and liabilities of life insurance operations in order to meet the
anticipated cash flow requirements of its policyholder obligations; and
(viii) the uncertainty involved in estimating the availability of
reinsurance and the collectibility of reinsurance recoverables.
The state insurance regulatory framework has, during recent years, come
under increased federal scrutiny, and certain state legislatures have
considered or enacted laws that alter and, in many cases, increase state
authority to regulate insurance companies and insurance holding company
systems. Further, the National Association of Insurance Commissioners
("NAIC") and state insurance regulators are re-examining existing laws
and regulations, specifically focusing on insurance companies,
interpretations of existing laws and the development of new laws. In
addition, Congress and certain federal agencies have investigated the
condition of the insurance industry in the United States to determine
whether to promulgate additional federal regulation. The Sponsor is
unable to predict whether any state or federal legislation will be
enacted to change the nature or scope of regulation of the insurance
industry, or what effect, if any, such legislation would have on the
industry.
All insurance companies are subject to state laws and regulations that
require diversification of their investment portfolios and limit the
amount of investments in certain investment categories. Failure to
comply with these laws and regulations would cause non-conforming
investments to be treated as non-admitted assets for purposes of
measuring statutory surplus and, in some instances, would require
divestiture.
Environmental pollution clean-up is the subject of both federal and
state regulation. By some estimates, there are thousands of potential
waste sites subject to clean up. The insurance industry is involved in
extensive litigation regarding coverage issues. The Comprehensive
Environmental Response Compensation and Liability Act of 1980
("Superfund") and comparable state statutes ("mini-Superfund") govern
the clean-up and restoration by "Potentially Responsible Parties"
("PRP's"). Superfund and the mini-Superfunds ("Environmental Clean-up
Laws or "ECLs") establish a mechanism to pay for clean-up of waste sites
if PRP's fail to do so, and to assign liability to PRP's. The extent of
liability to be allocated to a PRP is dependent on a variety of factors.
The extent of clean-up necessary and the assignment of liability has not
been fully established. The insurance industry is disputing many such
claims. Key coverage issues include whether Superfund response costs are
considered damages under the policies, when and how coverage is
triggered, applicability of pollution exclusions, the potential for
joint and several liability and definition of an occurrence. Similar
coverage issues exist for clean up and waste sites not covered under
Superfund. To date, courts have been inconsistent in their rulings on
these issues. An insurer's exposure to liability with regard to its
insureds which have been, or may be, named as PRPs is uncertain.
Superfund reform proposals have been introduced in Congress, but none
have been enacted. There can be no assurance that any Superfund reform
Page 12
legislation will be enacted or that any such legislation will provide
for a fair, effective and cost-efficient system for settlement of
Superfund related claims.
While current federal income tax law permits the tax-deferred
accumulation of earnings on the premiums paid by an annuity owner and
holders of certain savings-oriented life insurance products, no
assurance can be given that future tax law will continue to allow such
tax deferrals. If such deferrals were not allowed, consumer demand for
the affected products would be substantially reduced. In addition,
proposals to lower the federal income tax rates through a form of flat
tax or otherwise could have, if enacted, a negative impact on the demand
for such products.
Companies engaged in investment banking/brokerage and investment
management include brokerage firms, broker/dealers, investment banks,
finance companies and mutual fund companies. Earnings and share prices
of companies in this industry are quite volatile, and often exceed the
volatility levels of the market as a whole. Recently, ongoing
consolidation in the industry and the strong stock market has benefited
stocks which investors believe will benefit from greater investor and
issuer activity. Major determinants of future earnings of these
companies are the direction of the stock market, investor confidence,
equity transaction volume, the level and direction of long-term and
short-term interest rates, and the outlook for emerging markets.
Negative trends in any of these earnings determinants could have a
serious adverse effect on the financial stability, as well as the stock
prices, of these companies. Furthermore, there can be no assurance that
the issuers of the Securities included in the Trust will be able to
respond in a timely manner to compete in the rapidly developing
marketplace. In addition to the foregoing, profit margins of these
companies continue to shrink due to the commoditization of traditional
businesses, new competitors, capital expenditures on new technology and
the pressures to compete globally.
Portfolios
Equity Securities Selected for The Dow(sm) DART 5 Portfolio, 2(nd)
Quarter 2002 Series
, headquartered in
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Equity Securities Selected for the European Target 20 Portfolio, 2(nd)
Quarter 2002 Series
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Equity Securities Selected for the Global Target 15 Portfolio, 2(nd)
Quarter 2002 Series
Dow Jones Industrial Average(sm) Companies
__________________________________________
, headquartered in
Page 13
, headquartered in
, headquartered in
, headquartered in
, headquartered in
Financial Times Industrial Ordinary Share Index Companies
_________________________________________________________
, headquartered in
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Hang Seng Index Companies
_________________________
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Equity Securities Selected for the Target Small-Cap Portfolio, 2(nd)
Quarter 2002 Series
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Page 14
, headquartered in
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Equity Securities Selected for the Target VIP Portfolio, 2(nd) Quarter
2002 Series
The Dow(sm) DART 5 Strategy Stocks
__________________________________
, headquartered in
, headquartered in
, headquartered in
, headquartered in
, headquartered in
European Target 20 Strategy Stocks
__________________________________
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The Nasdaq(R) Target 15 Strategy Stocks
_______________________________________
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The S&P Target 24 Strategy Stocks
_________________________________
, headquartered in
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Page 15
, headquartered in
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Target Small-Cap Strategy Stocks
________________________________
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Page 16
, headquartered in
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Value Line(R) Target 25 Strategy Stocks
_______________________________________
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Equity Securities Selected for the Target VIP Aggressive Equity
Portfolio, 2(nd) Quarter 2002 Series
The Dow(sm) DART 10 Strategy Stocks
___________________________________
, headquartered in
, headquartered in
, headquartered in
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European Target 20 Strategy Stocks
__________________________________
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Page 17
, headquartered in
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The Nasdaq(R) Target 15 Strategy Stocks
_______________________________________
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The S&P Target 24 Strategy Stocks
_________________________________
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Page 18
, headquartered in
, headquartered in
, headquartered in
Target Small-Cap Strategy Stocks
________________________________
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Value Line(R) Target 25 Strategy Stocks
_______________________________________
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Page 19
, headquartered in
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Equity Securities Selected for the Target VIP Conservative Equity
Portfolio, 2(nd) Quarter 2002 Series
The Dow(sm) DART 10 Strategy Stocks
___________________________________
, headquartered in
, headquartered in
, headquartered in
, headquartered in
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European Target 20 Strategy Stocks
__________________________________
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The S&P Target 24 Strategy Stocks
_________________________________
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, headquartered in
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Page 20
, headquartered in
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Target Small-Cap Strategy Stocks
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Page 21
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Value Line(R) Target 25 Strategy Stocks
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Equity Securities Selected for the Total Target Portfolio, 2(nd) Quarter
2002 Series
The Dow(sm) DART 5 Strategy Stocks
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The Nasdaq(R) Target 15 Strategy Stocks
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Page 22
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The S&P Target 24 Strategy Stocks
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We have obtained the foregoing company descriptions from sources we deem
reliable. We have not independently verified the provided information
either in terms of accuracy or completeness.
Page 23
MEMORANDUM
Re: FT 611
The only difference of consequence (except as described
below) between FT 585, which is the current fund, and FT 611, the
filing of which this memorandum accompanies, is the change in the
series number. The list of securities comprising the Fund, the
evaluation, record and distribution dates and other changes
pertaining specifically to the new series, such as size and
number of Units in the Fund and the statement of condition of the
new Fund, will be filed by amendment.
1940 ACT
FORMS N-8A AND N-8B-2
These forms were not filed, as the Form N-8A and Form N-8B-2
filed in respect of Templeton Growth and Treasury Trust, Series 1
and subsequent series (File No. 811-05903) related also to the
subsequent series of the Fund.
1933 ACT
PROSPECTUS
The only significant changes in the Prospectus from the
Series 585 Prospectus relate to the series number and size and
the date and various items of information which will be derived
from and apply specifically to the securities deposited in the
Fund.
CONTENTS OF REGISTRATION STATEMENT
ITEM A Bonding Arrangements of Depositor:
Nike Securities L.P. is covered by a Broker's Fidelity
Bond, in the total amount of $2,000,000, the insurer
being National Union Fire Insurance Company of
Pittsburgh.
ITEM B This Registration Statement on Form S-6 comprises the
following papers and documents:
The facing sheet
The Prospectus
The signatures
Exhibits
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, FT 611 has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Village of Lisle
and State of Illinois on March 14, 2002.
FT 611
(Registrant)
By: NIKE SECURITIES L.P.
(Depositor)
By Robert M. Porcellino
Senior Vice President
S-2
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below by the following person in the capacity and on the date
indicated:
NAME TITLE* DATE
David J. Allen Director )
of Nike Securities )
Corporation, the ) March 14, 2002
General Partner of )
Nike Securities L.P.)
Judith M. Van Kampen Director )
of Nike Securities ) Robert M. Porcellino
Corporation, the ) Attorney-in-Fact**
General Partner of )
Nike Securities L.P.)
Karla M. Van Kampen-Pierre Director )
of Nike Securities )
Corporation, the )
General Partner of )
Nike Securities L.P.)
David G. Wisen Director )
of Nike Securities )
Corporation, the )
General Partner of )
Nike Securities L.P.)
* The title of the person named herein represents his
capacity in and relationship to Nike Securities L.P.,
Depositor.
** An executed copy of the related power of attorney
was filed with the Securities and Exchange Commission in
connection with the Amendment No. 1 to Form S-6 of FT 597
(File No. 333-76518) and the same is hereby incorporated
herein by this reference.
S-3
CONSENTS OF COUNSEL
The consents of counsel to the use of their names in the
Prospectus included in this Registration Statement will be
contained in their respective opinions to be filed as Exhibits
3.1, 3.2, 3.3 and 3.4 of the Registration Statement.
CONSENT OF DELOITTE & TOUCHE LLP
The consent of Deloitte & Touche LLP to the use of its name
and to the reference to such firm in the Prospectus included in
this Registration Statement will be filed by amendment.
CONSENT OF FIRST TRUST ADVISORS L.P.
The consent of First Trust Advisors L.P. to the use of its
name in the Prospectus included in the Registration Statement is
filed as Exhibit 4.1 to the Registration Statement.
S-4
EXHIBIT INDEX
1.1 Form of Standard Terms and Conditions of Trust for The
First Trust Special Situations Trust, Series 22 and
certain subsequent Series, effective November 20, 1991
among Nike Securities L.P., as Depositor, United States
Trust Company of New York as Trustee, Securities
Evaluation Service, Inc., as Evaluator, and Nike
Financial Advisory Services L.P. as Portfolio Supervisor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-43693] filed on behalf of The First Trust
Special Situations Trust, Series 22).
1.1.1* Form of Trust Agreement for FT 611 among Nike Securities
L.P., as Depositor, JPMorgan Chase Bank, as Trustee and
First Trust Advisors L.P., as Evaluator and Portfolio
Supervisor.
1.2 Copy of Certificate of Limited Partnership of Nike
Securities L.P. (incorporated by reference to Amendment
No. 1 to Form S-6 [File No. 33-42683] filed on behalf of
The First Trust Special Situations Trust, Series 18).
1.3 Copy of Amended and Restated Limited Partnership
Agreement of Nike Securities L.P. (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
33-42683] filed on behalf of The First Trust Special
Situations Trust, Series 18).
1.4 Copy of Articles of Incorporation of Nike Securities
Corporation, the general partner of Nike Securities L.P.,
Depositor (incorporated by reference to Amendment No. 1
to Form S-6 [File No. 33-42683] filed on behalf of The
First Trust Special Situations Trust, Series 18).
1.5 Copy of By-Laws of Nike Securities Corporation, the
general partner of Nike Securities L.P., Depositor
(incorporated by reference to Amendment No. 1 to Form S-6
[File No. 33-42683] filed on behalf of The First Trust
Special Situations Trust, Series 18).
2.1 Copy of Certificate of Ownership (included in Exhibit 1.1
filed herewith on page 2 and incorporated herein by reference).
2.2 Copy of Code of Ethics (incorporated by reference to
Amendment No. 1 to form S-6 [File No. 333-31176] filed on behalf
of FT 415).
3.1* Opinion of counsel as to legality of Securities being
registered.
S-5
3.2* Opinion of counsel as to Federal income tax status of
Securities being registered.
3.3* Opinion of counsel as to New York income tax status of
Securities being registered.
3.4* Opinion of counsel as to advancement of funds by Trustee.
4.1* Consent of First Trust Advisors L.P.
6.1 List of Directors and Officers of Depositor and other
related information (incorporated by reference to
Amendment No. 1 to Form S-6 [File No. 33-42683] filed on
behalf of The First Trust Special Situations Trust,
Series 18).
7.1 Power of Attorney executed by the Directors listed on
page S-3 of this Registration Statement (incorporated by
reference to Amendment No. 1 to Form S-6 [File No.
333-76518] filed on behalf of FT 597).
___________________________________
* To be filed by amendment.
S-6